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The Hungarian Competition Authority (GVH) concluded that Heineken had not adequately justified its commitments to reduce the volume of beer sold under exclusive contracts and therefore imposed a fine of HUF 75 million on the company.
One of the biggest sources of conflict in the Hungarian beer market dates back a long time: the essence of this is that 70-75 percent of beer brands are in the hands of subsidiaries of increasingly important international players in Hungary and beer brands around the world. At home, this has led to an oligopolistic market, as there has been little tradition of small-scale or home-brewing.
The largest players maintained their dominance of the market by entering into exclusive contracts with restaurants, which also included fines. In return, pubs and restaurants received branded products: free signage, glasses, beer taps, ashtrays, beer coasters, etc. they agreed to the contract and the beer. Small breweries could not compete with this, but restaurants did not risk selling products on a small scale due to the prescribed amount of consumption.
Already in 2011 and 2015, the Hungarian Competition Authority became aware of the problem and intervened in the domestic beer market. The organization found that Heineken, Borsodi, Dreher and, then foreign, now domestic, Pécs Brewery took between 43.5 and 44.3 percent of the total beer turnover of restaurants with exclusive contracts. At that time, the companies committed to reducing the volume of beer sold in this way in two steps in two steps, by the end of 2017, and the excluded market contracted to 30 percent, further reduced by the market’s own processes. : the growing demand for craft beers. it turned its back on the big manufacturers from the start.
The Competition Authority has reviewed this previous agreement and concluded in the proceedings in December 2019 that the commitments of Dreher and Borsodi have been fulfilled. However, the third major factory, Heineken, deviated from the methodology and form required by GVH to certify commitments, as proposed by the breweries themselves. The company did not submit the calculations and declarations necessary for the verification of the commitment in the prescribed manner within the time limit, for which the competition authority imposed a fine of HUF 75 million on the company.
New regulations came into effect in June this year, as a result of which small breweries can further improve their market position. By mid-2021 at the latest, at least one small-scale beer must reach 20% of draft beer consumption in restaurants that have a partial or exclusive distribution contract with a large brewery. Small breweries welcomed the change, but smaller pubs in the countryside are still not happy with it, as we wrote about it in our report.
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