Castel Frères Fined $5.5m For "Grave Failure" Over Acquistion

(Wine-Searcher) - Bordeaux wine giant Castel Frères has been hit with a fine of four million euros ($5.5 million) for having deliberately neglected to inform the French competition authority it had acquired Burgundy's Patriarche group in 2011.

It’s only the third time in its history that the authority has sanctioned a company for “failure to notify.” The two previous fines were ten times lower than that imposed on Castel Frères, at 392,000 euros ($538,541) and 400,000 euros ($549,500).

In imposing its fine on Castel’s parent company, Copagef, the competition authority (L'Autorité de la concurrence) said it wanted to stress the “gravity” of the failure and the way that “Castel Frères had deliberately ignored its obligations in order to quickly complete the transaction.”

The level of the fine took account of the company's size.

Castel bought six companies from Patriache in May 2011 without advising the authority, which is primarily charged with verifying that acquisitions do not infringe French laws on competition.

“The transaction was brought to the authority’s attention by a third party,” the competition watchdog noted. After conducting an investigation, it validated the acquisition in July 2012, despite Castel’s already significant share of the mass-market wine sector.

The authority noted at the time that the entity created by the acquisition owned “several labels from this category (notably Vieux Papes, La Villageoise, Cambras, Cramoisay, Champlure and Lichette), some of which seem to be ubiquitous."

While validating the acquisition, the authority had doubts about the way it had been conducted and reserved the possibility of imposing a financial penalty.