Mexico's biggest brewers, Grupo Modelo and Cuauhtemoc Moctezuma, have agreed to open up the local beer market to end a dispute over the domination the two have long enjoyed in Latin America's second-biggest economy.

Mexico's Federal Competition Commission (Cofeco) said on Thursday that Modelo, a unit of Anheuser-Busch InBev SA, and Cuauhtemoc, which belongs to Heineken NV, would have to reduce exclusivity deals they have with clients in Mexico over the next five years or face heavy fines.

The directive follows a longstanding complaint from rival SABMiller, which has struggled to make headway selling its brands, which include Miller, Grolsch and Peroni, in Mexico.

A spokesman for SABMiller declined to comment.

The two Mexican brewers agreed to conditions including limiting exclusivity deals in convenience stores and restaurants to a maximum of 25 percent of points of sale, reducing this to 20 percent over the next five years.

Aside from loosening the hold the two big companies have on the market, the decision delivered a boost to microbrewers.

"All craft beers will enjoy open and unrestricted access to all restaurants, bars and cantinas in the country," Cofeco said.

If Cuauhtemoc, the maker of beers including Sol, or Modelo, which produces Corona, fails to meet the conditions set out by Cofeco, it could result in a fine of up to 8 percent of the company's annual Mexican revenues, the watchdog said.

Shares in both Heineken and AB InBev closed up nearly 1 percent following the decision. SABMiller's shares were up by nearly 2 percent on the London stock exchange.

DOMINATION

All exclusivity agreements made by Cuauhtemoc and Modelo must be in written form, be of limited duration with their terms published in national newspapers, Cofeco said.

Restaurants and bars in Mexico have received a range of incentives for running exclusivity deals with the brewers, that extend from awnings, games, refrigerators, and, if sales are high enough, a discount on inventory purchases.

Plenty of Mexicans have looked forward to change in the market, which is a near duopoly for the two big brewers.

"The monopoly that Grupo Modelo and Cuauhtemoc have is really screwed up," said Paco Bernal, the dreadlocked manager at El Palenguito, a small, dimly lit mezcal bar in Mexico City's Roma Norte neighborhood, earlier this week.

AB InBev, the world's largest brewer, and Heineken have carved up much of Brazil's market as well as Mexico. SABMiller has leading positions in the smaller Latin American nations such as Colombia and Peru.

AB InBev this year completed its purchase of the half of Modelo it did not already own after settling a dispute with the U.S. Justice Department.

Dutch brewer Heineken acquired Cerveceria Cuauhtemoc Moctezuma, whose other brands include Dos Equis and Indio from Coca-Cola bottler Femsa, in 2010.

Femsa, which has a 20 percent stake in Heineken, operates the Oxxo chain of convenience stores in Mexico and has exclusivity deals to sell the Dutch firm's beers. Grupo Modelo has similar exclusive agreements with bars and restaurants.

Despite the agreements, craft brewers have been finding their way into the Mexican market little by little, said Alfonso Torres Cabello, the director of Cervefest, an annual event intended to link microbrewers with vendors and the public.

"There will be a large market for both segments of producers," Torres said.

Responding to Cofeco's decision, Cuauhtemoc said on its website that microbrewers were defined as companies making up to 100,000 hectolitres of beer per year.