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Carlsberg’s standard agreements in the Horeca-sector - prolongation of commitments

28. May 2008

Journal nr. 4/0120-0289-0071/MES//NVH

On 28 May 2008, the Danish Competition Council (DCC) adopted a four-year prolongation of DCC’s decision of 26 October 2005 that rendered legally binding commitments from Carlsberg Denmark A/S (Carlsberg) concerning Carlsberg’s beer agreements with Danish hotels, restaurants and cafes etc. (Horeca-sector), cf. the summary of the 2005-decision for further background. In the 2005-decision, the commitments were made binding until 31 December 2007.

In the preliminary view of the Danish Competition Authority (DCA) from 2005, the following provisions in Carlsberg’s agreements raised concerns: long non-cancellation periods, long notice of termination and Carlsberg’s right to enter into exclusivity agreements.

To comply with the concerns of the DCA, Carlsberg in 2005 submitted a set of commitments.

The main content of the commitments are the following:

  1. Termination of installation agreements and cooperation agreements with Carlsberg is made possible with a 3 months term of notice without costs for the outlets
  2. Carlsberg will ensure that it is always possible to make place for a second beer barrel installation at the bar counter
  3. Carlsberg’s use of exclusive agreements is restricted
  4. Outlets with beer installations are entitled to buy the installations from Carlsberg after a period of 5 (beer barrel installations) or 12 (beer drive installations) years after the effective date of the first installation agreement or cooperation agreement (switching).

It is the DCA’s view that the short termination periods and the possibility for switching considerably reduce the barriers which have previously existed for either replacing or supplementing a Carlsberg beer installation with an installation owned by the outlet itself or a third party.

A closer evaluation in 2008 of the effects of the commitments on the market is difficult as the commitments have only been binding for two years. Habits and practises are difficult to change and the possibility of switching only comes into force in 2010.

A market investigation conducted by the DCA in 2007 has shown that Carlsberg’s share of the market has not changed appreciably. A large number of very small suppliers have entered the Danish market and the number of different beer brands has increased significantly. Carlsberg’s commitments cannot explain this development, but the shorter terms of notice, and the restrictions on the use of exclusive agreements have made entry onto the market easier for newcomers.

The commitments have ensured that the foreclosure effect of Carlsberg’s agreements has been reduced considerably. The DCC therefore adopted a decision whereby the commitments are made binding until the end of 2011.