CCI pours beer companies hefty penalty

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CCI-beer-cartelisation-penalty-United-Breweries,-Carlsberg-India-and-Anheuser-Busch-InBev-(AB-InBev)

India’s antitrust watchdog has nailed United Breweries, Carlsberg India and Anheuser Busch InBev (AB InBev) for indulging in cartelisation, and the All India Brewers Association has not been spared either for the role it played in facilitating the beer cartel.

The Competition Commission of India (CCI) imposed a fine of INR8.7 billion (USD116 million) against United Breweries, Carlsberg and the All India Brewers Association on 24 September.

The cartel came to light when Belgian brewer AB InBev took over Crown Beers and SABMiller. In 2017, AB InBev blew the whistle on United Breweries, Carlsberg, Crown Beers India and SABMiller India colluding in the sale and supply of beer across 10 states and territories, from 2009 to 2018.

The beer manufacturers engaged in price co-ordination in Andhra Pradesh, Karnataka, Maharashtra, Odisha, Rajasthan, West Bengal, the National Capital Territory of Delhi and the Union Territory of Puducherry. Collectively, they restricted the supply of beer in Maharashtra, Odisha and West Bengal.

The four players had a combined market share of nearly 90% in the country. The CCI initiated an investigation into the beer cartel that went on for four years, following which it imposed the fines. It concluded that the parties indulged in exchanges of vital information among themselves regarding pricing and other confidential and business-sensitive information.

They mutually agreed on price revisions to be sought from respective state governments. A host of email communications, WhatsApp and SMS messages, and even conference calls were exchanged between top management personnel of these companies to decide prices, follow up with state authorities, and even co-ordinate a common response to show cause notices issued by state excise commissioners.

As the parties co-operated in the investigation, United Breweries and Carlsberg, received fine reductions of 40% and 20%, respectively, and were asked to pay a fine of INR7.5 billion and INR1.2 billion, respectively. AB InBev, the leniency applicant, received a 100% fine reduction.

Industry sources anticipate that United Breweries will appeal the CCI decision, given the arguments it had put forward during the cartel probe, that the “draconian laws and practices adopted by the states make it impossible for beer companies to compete in the ordinary course of business”.

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The Briefing is prepared by Freny Patel.