* Court cuts Heineken fine to 198 mln euros from 219.3 mln
* Bavaria cartel fine cut to 20.7 mln from 22.85 mln
* Court: EU regulator failed to prove illegal coordination
* Fines were for fixing Dutch beer prices from 1996 to 1999

(Adds Commission comments, shares)

By Foo Yun Chee

BRUSSELS, June 16 (Reuters) – Dutch brewer Heineken NV won a 10 percent cut in a cartel fine when Europe’s second-highest court said EU regulators failed to prove it had violated EU laws by coordinating commercial terms with peers.

The Luxembourg-based General Court on Thursday reduced Heineken’s penalty to 198 million euros ($280 million) from 219.28 million and also cut a fine for privately owned Dutch brewer Bavaria to 20.71 million euros from 22.85 million on the same basis.

The companies and a third Dutch brewer, Grolsch, were hit with a total fine of 273.78 million euros by the European Commission four years ago for fixing prices and coordinating commercial terms in the beer market in the Netherlands between 1996 and 1999.

“The Court considers that the Commission has not proved that the infringement concerned the occasional coordination of commercial conditions, other than prices, offered to individual customers in the on-trade segment,” the Court said.

It said references contained in handwritten notes cited by the regulator as evidence of guilt were sporadic and brief and that the companies had submitted a plausible alternative explanation.

The Commission sought to play down the verdict, saying the Court had largely upheld its policy of imposing deterrent fines.

It also said it had now overhauled internal procedures to ensure cases would be handled promptly, without undue delays. Cartel investigations typically take several years until a decision is issued.

Heineken shares were down 0.6 percent at 39.87 euros by 1300 GMT versus a 0.4 percent decline in the Stoxx 600 food and beverage index .

An appeal by Grolsch against its 31.7 million euro fine is pending at the court. The company was acquired by world No. 2 brewer SABMiller in 2007.

InBev, which merged with Anheuser-Busch in 2008 to form the world’s largest brewer AB InBev , received immunity in return for providing decisive information to the regulator.