Carlton & United Breweries and Lion have not misused their market power to squeeze craft brewers out of Australian pubs, clubs and hotels through exclusive licences.
That’s the verdict of the Australian Competition and Consumer Commission (ACCC) after a three-year investigation into contracts and practices at 36 venues across NSW and Victoria that found the big brewers were unlikely to have substantially lessened competition.
Craft brewers had complained that some of Lion and CUB’s contracts requiring venues to dedicate more than 80% of beer taps to big brands in exchange for rebates, infrastructure investment and refurbishment loans.
After investigating venues around Sydney and Melbourne, regional NSW centres such as Armidale, Grafton and Bungendore, Newcastle, NSW Central Coast, the Victorian Surf Coast and regional Victorian centres like Bendigo and Ballarat, the ACCC found that some contracts included minimum volume requirements that restricted some craft brewers’ access to taps.
“Although some venues had exclusivity arrangements, most pubs and clubs said they did not feel constrained from allocating taps to smaller brewers and could make taps available for craft beer if necessary,” ACCC Deputy Chair Dr Michael Schaper said.
“While some craft brewers may have been refused access to taps by certain venues, our investigation found that the venues were responding to consumer demand for certain beer brands, rather than restrictions imposed by the big brewers.
“In fact, over half of the venues contacted by the ACCC indicated that customer preference was the key factor in determining the brands, types of beer and number of craft beers offered by the venue.”
Big brewers welcome verdict
Lion and CUB have expressed their satisfaction with the result.
“Anyone who enters a pub these days can see there’s plenty of choice in tap beer,” a Lion spokesman said. “Smaller brewers with good beers are able to both achieve distribution and attractive growth. Lion will continue to invest in growing the beer category, and in encouraging appreciation of great beers regardless of the size of the company that makes them.”
A spokesman for CUB said it was pleased with the ACCC’s conclusion that beers on tap were determined by consumers, not restrictions: “CUB welcomes the conclusion of the ACCC’s investigation, which made no adverse findings.”
Independent Brewers Association says verdict is “body blow”
However, the Independent Brewers Association described the ACCC’s decision as a “body blow” for independent brewing.
“This investigation has been dragging on for more than three years and to now find out that the status quo will be maintained is a bit hard to take,” said IBA Chair Ben Kooyman.
“For any small business to survive it needs protection from the market practices of dominant players. We had hoped that Australian consumer law, as interpreted by the ACCC, would be able to provide that protection. It seems we were wrong.
“The ACCC’s finding that tap contracts do not substantially lessen competition certainly does not match the realities faced by our members in the marketplace. We find it puzzling that the investigation seems to have focused on the venue’s experience rather than that of small brewers.”
Kooyman told ABC News that craft brewers had approached venues and been told that they’ve been fully contracted.
He said he hoped customers will “vote with your throat” to keep the boutique industry alive.
Mazan Hajjar, founder of Hawkers Beer, was more forceful in his condemnation of the verdict. He told Beer & Brewer the ACCC is “basically an underfunded toothless tiger and anyone who was under any impression that they would ever come up with anything was crazy.”
What’s next for the taps?
The ACCC said it still “remains concerned about some contracts” at venues and would be watching the industry closely.
It noted that it will monitor Lion and CUB’s conduct in regard to contracts that secure more than 80% of taps for their brands in exchange for favourable rebates or loans.
“There has been a significant growth in craft beer sales during the ACCC’s investigation and we will continue to monitor for anti-competitive behaviour,” Schaper said.
Schaper told Australian Brews News the growth of craft beer market share was a positive sign for the future.
“At a macro level it would seem to suggest they are getting their feet in the door, in some places enough to start changing behaviour,” he said.
“And it is a very dynamic market and we are willing to come back and look at this in the future because the market keeps changing.”
The IBA will continue to pursuing the issue as part of its on-going advocacy campaign for independent brewers to get a better deal in terms of tap availability and tax concessions.
“This isn’t the end of the battle,” Kooyman said.
