Belgian Competition Authority Fines Yeast Producer for Resale Price Maintenance and Abusive Behaviour

• 23/03/2017
• Articles

On 22 March 2017, the Belgian Competition Authority (Belgische Mededingingsautoriteit / Autorité belge de la Concurrence) (“BCA”) imposed a fine of EUR 5,489,000 on leading yeast producer Algist Bruggeman NV (“AB”) and its parent companies L.H.B. S.A. / N.V., Compagnie des Levures Lesaffre S.A. and Lesaffre et Compagnie S.A. for several infringements of Articles 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”) and their equivalents under Belgian Law, Articles IV.1 and IV.2 of the Code of Economic Law (Wetboek van Economisch Recht / Code de droit économique) (“CEL”).

This decision is the result of a settlement between the BCA and AB. This means that AB acknowledged that, from January 2008 to June 2013, it engaged in resale price maintenance contrary to Article 101 TFEU and Article IV.1 CEL and abused its dominant position contrary to Article 102 TFEU and Article IV.2 CEL, in return for a 10% fine reduction and a shortened procedure.

First, AB fixed the price that its distributors could charge for the resale of compressed fresh bakers’ yeast to artisanal and semi-artisanal bakeries. Distributors could not deviate from AB’s prices and had to ask for AB’s prior approval if they wished to grant their customers a discount in individual cases. AB, in turn, only consented to a discount if the customers at issue considered switching to competing products. In addition, AB defined itself the level of such a discount. AB also engaged in customer allocation and concluded long-term purchasing agreements with bakeries: AB linked the sale of stabilised liquid bakers’ yeast to the acquisition of a yeast dosing installation whose depreciation was included in the purchase price of the yeast for an abnormally long period. This was associated with non-compete clauses applicable to all kinds of yeasts (and thus not limited to stabilised liquid yeast).

Second, the BCA found that AB had abused the dominant position which it holds on the market for the supply of fresh bakers’ yeast by offering individualised exclusivity and loyalty-inducing retroactive discounts to its artisanal and its semi-artisanal customers aimed at foreclosing its competitors. AB notably offered rebates to its customers on the condition that they would not include the yeast of AB’s competitors in their product range. AB also communicated to distributors and bakeries the results of partial internal analyses which were not supported by official bodies and created uncertainty regarding the quality of the yeast of these competitors. The BCA found that this amounted to denigrating behaviour. Furthermore, AB caused distributors to protest against their inclusion in a list of distributors which AB’s rival Basic Bakery had established, even though the reference was factually correct. As a result, Basic Bakery could no longer name any distributors in its client newsletters.

Since AB agreed to settle, the BCA’s decision is final and not subject to appeal.