AB InBev APAC partial sale; ACCC

ACCC hold-up in Carlton & United takeover

October 23, 2019
By Alana House

The ACCC has recommenced its consideration of the $16billion Asahi takeover of Carlton & United Breweries after halting proceedings last month.

The competition watchdog had been due to deliver its verdict on October 31, but has since extended its decision date until December 5.

The case was put on hold on September 30 while the ACCC awaited further information from Asahi.

Asahi currently has a 3.5% share of the Australian market, with the deal giving it just over 50% of the market. The next nearest competitor is Lion at 37%.

According to The Australian, the ACCC’s main concern with the deal is “its impact in creating barriers to entry of new boutique breweries”.

The ACCC previously looked at the beer market as a whole, but its believed this time it will consider the deal’s impact on the craft sector separately, in relation to tied hotels.

“It has long expressed an interest in tied hotel arrangements in which the big brewers use their market power to prevent pubs from carrying other brands,” the newspaper noted.

“The Asahi takeover is a good opportunity to find out more about those arrangements.”

Cider industry calls on ACCC to review sale

In August, the cider industry demanded the ACCC review the acquisition.

Sam Reid; ACCC

Cider Australia President Sam Reid spoke out about the the dominant effect the merger will have on the Australian cider market.

The deal will see 70% of the Australian cider category owned by Asahi (according to IRI World data), with Asahi’s expanded portfolio including Somersby, Bulmers, Mercury and Strongbow, as well as craft-style brands such as Pure Blonde, Bonamy’s and the Spring Cider Co.

“It’s about whether these companies can use [their market share] to materially disadvantage the marketplace,” Reid told Brews News.

“What we’re doing as an industry body is to call out this huge, dominant market share and saying to the ACCC ‘perhaps you should look again?’”

The Foreign Investment Review Board is also closely examining Asahi’s financing and tax mitigation practices in Australia before it approves the bid.

Tap contract concerns

Additionally, Cider Australia expressed concern about the effect the deal will have on tap contracts for the cider industry.

Cider Australia; Willie Smith's Cider; ACCC

Reid told Brews News taps can be “extremely exclusive in what is already a challenging marketplace”.

“Cider just gets wrapped up as a category in tap contracts, a major producer might take 70-90% of available taps and they will definitely take the cider taps, as cider generally becomes an exclusive add-on,” he explained. “That’s how it’s been looked at, hence the lack of innovation in the cider category.”

The ACCC said it will continue to look closely at beer distribution arrangements in Australia.

“The ACCC continues to take an active interest in conduct which raises any competition concerns in beer distribution arrangements, as it does across a wide range of industries across the Australian economy,” the competition watchdog noted last month.

Reid suggested the ACCC consider prohibiting non-price incentives in tap contracts, or even getting rid of tap contracts completely, as they have been in the US.

He wants cider to be recognised by the ACCC as being a separate category to beer.

“With the 100% Australian-grown trust mark we’ve introduced, it’s the right time to call for craft cider to be called out separately.

“Some people think that all cider is cider but we don’t believe it, there’s cider made from apples from Australian farms which are creating jobs and supporting the local economy, and there’s cider made from imported concentrate. They are significantly different,” he concluded.

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