Venezuela’s Competition Authority (Procompetencia) has fined spirits company Diageo for violations of that country’s competition laws. The agency first investigated Diageo following complaints by rivals Distribuidora Glasgow, C.A. (Distribuidora) and Pernod Ricard Venezuela (Pernod) that Diageo had harmed competition through use of exclusionary contracts in the marketing and distribution of its brands. According to complaints, Diageo used sponsorship contracts to require bars and restaurants to stock its iced vodka and whisky brands. After a two-year legal battle that unearthed additional competition complaints, Procompetencia fined Diageo US$3.2 million, the second largest such fine in the agency’s history.
In addition to the fine against Diageo, the Competition Authority also ruled that certain clauses in Diageo’s distribution contracts were null and void, and issued a cease and desist order that will allow smaller firms to compete for promotional contracts. Also, as a result of its investigation into the industry, Procompetencia fined Pernod US$1.31 million for its own exclusionary contracts.
Distribuidora, which emerged from the investigation unscathed, was represented by Squire Sanders Caracas lawyers Hernando J. Diaz-Candia, Bernardo Weininger and Arghemar Perez.