Grupo Modelo SAB (GMODELOC) and Heineken NV (HEIA) are blocking consumer choice in Mexico, the world’s sixth-biggest beer market, with inducements to businesses to thwart rival brewers, SABMiller Plc (SAB) said.
Modelo, maker of Corona beer, and Dos Equis producer Heineken offer loans, upfront payments and refrigerators to restaurants and retailers that agree not to serve other brands, said Armando Valenzuela, the head of SABMiller’s Mexico unit.
The practice is the focus of SABMiller’s 2010 antitrust complaint against Mexico’s two largest brewers, the second time the London-based company has formally accused them of blocking competition. Mexico’s antitrust agency decided Feb. 14 to extend an inquiry into the complaint for 120 business days after grouping it with other cases filed by undisclosed parties.
“We haven’t been able to sell to clients because they’re exclusive with one or the other,” Valenzuela said in an interview at Bloomberg’s Mexico City office. “What we’re seeking is access to the market that we don’t have now.”
Mexico’s beer market is a prize for brewers because it’s still growing while U.S. and European consumption stagnates. Volumes will rise 2.9 percent a year to 73 million hectoliters (1.9 billion gallons) in 2015, according to research firm Plato Logic Ltd. in London.
Cuauhtemoc Moctezuma, the Mexican unit of Amsterdam-based Heineken, said it strictly observes the country’s competition law. Actions that restrict competitors from entering a market can only be punished if they are found to hurt competition more than they enhance it, the company said in an e-mail.
“We’re in a permanent battle with our competition for the conquest of each customer and each client that sells our products,” Cuauhtemoc Moctezuma said.
Jennifer Shelley, a spokeswoman for Mexico City-based Modelo, declined to comment.
Modelo fell 0.4 percent to 83.62 pesos at the close in Mexico City. Heineken slid 0.7 percent to 39.60 euros in Amsterdam, and SABMiller was little changed at 2,583 pence in London.
SABMiller is the world’s second-largest brewer. No. 1 Anheuser-Busch InBev NV (ABI), which is based in Leuven, Belgium, sells brands such as Budweiser in Mexico and has a 50 percent, non-controlling stake in Modelo.
SABMiller has found a niche in some cities near the U.S. border and in retailers such as Wal-Mart Stores Inc. (WMT)’s Mexican unit. That hasn’t been enough to challenge Modelo and Heineken, whose combined market share exceeds 90 percent, according to Lauren Torres, an analyst at HSBC Holdings Plc in New York.
“Mexico’s been one of those markets where the doors are technically open to foreign competition,” Torres said in a phone interview. “But because of the heritage and the history and relationships, it’s incredibly hard to make any inroads and have any notable business there when you have these very strong players fending off competition.”
Torres has a “neutral” rating on SABMiller, Modelo and Heineken.
Heineken entered the Mexican market by buying Fomento Economico Mexicano SAB’s brewing unit in 2010 in a transaction that Femsa valued at $7.35 billion when it was announced.
SABMiller has been selling in Mexico for two decades with brands that include Miller Lite, MGD and Miller High Life. The company almost succeeded in striking a blow against exclusivity deals in 2006, when the antitrust agency ordered Modelo to drop such contracts.
Modelo appealed the ruling, and regulators reversed course later that year, dropping the case after concluding that the original decision should have evaluated the market for all low- alcohol-content beverages and not just beer.
Eduardo Perez Motta, Mexico’s antitrust chief, said in a 2006 interview that while exclusive deals aren’t prohibited by law, they’re banned when “done to displace competitors.” He said at the time that regulators would pay “close attention” to the beer industry.
An antitrust official who can’t be identified under the agency’s policy declined to comment this week because the probe into SABMiller’s current complaint is in progress.
“We’re seeking for the Mexican consumer to be able to choose his beer brand, whether it be domestic or imported,” Valenzuela said. “Many consumer categories already offer a choice in Mexico, but beer doesn’t.”
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