The ACCC has announced it will not oppose the CUB sale to Asahi, subject to the Japanese brewer divesting two of its beer brands and three of its cider brands in Australia.
The CUB sale been a long battle for Asahi, with AB InBev agreeing in July 2019 to divest its Australian operations for $AU16billion.
Asahi said it “welcomes today’s announcement”.
“We will now be putting in place steps to establish a standalone, independent business unit to help manage the divestment of these brands,” a spokesperson said.
“The deal requires the approval of the Foreign Investment Review Board and Asahi will continue to work with the regulators towards this.”
The brands to be sold to close the deal are Strongbow, Bonamy’s and Little Green cider and the Stella Artois and Beck’s beers. The future buyer or buyers of these assets will need to be approved by the ACCC.
“The ACCC was concerned that without the divestments, the proposed acquisition would substantially lessen competition in the cider market and remove a vigorous and effective competitor in the beer market,” ACCC Chair Rod Sims said.
“Without the sale of five beer and cider brands including Strongbow and Stella Artois, the combined Asahi-CUB company would have accounted for two thirds of cider sales in Australia, and owned the two largest cider brands, Somersby and Strongbow.”
“We determined that Asahi selling the beer and cider brands would be sufficient to address our competition concerns and provide an opportunity for another business to play an important role in a relatively concentrated industry,” Mr Sims said.
Although Asahi supplies a relatively small share of beer sales in Australia, the ACCC was concerned the proposed acquisition would have removed a rival capable of competing strongly against the two largest beer brewers, CUB and Lion.
Asahi and CUB currently compete closely in the sale of premium international beers.
Asahi has provided a court-enforceable undertaking to the ACCC to divest the five brands. The undertaking also requires Asahi to ensure divested brands get the same access to bars, pubs and clubs as well as off-premise space under tap-tying agreements as Asahi’s brands for the next three years.
CUB’s parent, AB InBev, has also provided a court-enforceable undertaking to facilitate and not unreasonably withhold consent to the transfer of relevant beer brand rights and obligations to the future buyer or buyers.
The ACCC will issue a public competition assessment in due course. Further information is available at Asahi Group Holdings – Carlton & United Breweries (owned by Anheuser Busch InBev SA/NV).
In December 2019, the ACCC raised competition concerns about the proposed deal.
IBA objects to ACCC approving CUB takeover
The Independent Brewers Association says independent brewers have been “dealt a further blow” during COVID-19 by the ACCC allowing the CUB takeover by Asahi.
“The move by Asahi to acquire CUB is an admission that this space is already too concentrated and that the only way to break into the draught beer market is to acquire businesses with existing tap contracts,” said Peter Philip, IBA Chair.
The IBA said Asahi had made a “token undertaking” by agreeing to divest Beck’s and Stella Artois.
In an IBA submission to the ACCC, the IBA said that divestment of these two brands “make up such a small percentage of taps in pubs as to be meaningless in balancing out the anti-competitive nature of the acquisition”.
“It’s really disappointing to see that the ACCC thinks that the profit of big multinational businesses outweigh the impact that this merger will have on small family-owned Aussie brewers,” Philip said.
He added that the IBA will be taking the issue to “the highest levels of Government”.
“All we’re asking for is a level playing field, surely having an open and competitive beer market is good for consumers,” he said. “Isn’t the role of the ACCC to ensure Australian’s have the widest choice of beers available at the best price?”
