Australia: The Australian Competition and Consumer Commission launches formal investigation into AB InBev and SABMiller merger

The Australian Competition and Consumer Commission has launched a formal investigation into the merger between global beer giants Anheuser Busch InBev and SABMiller, with key concerns including control over pub sales and the right to distribute Corona beer, The Australian reported on January 25.

The competition regulator has slated the inquiry to end on April 14, with submissions due on February 15.

Under scrutiny will be the impact of the massive merger deal on the structure and market share in Australia’s A$10 bln beer industry.

Anheuser-Busch InBev’s formal agreement in November to buy SABMiller set off a complicated, year-long process of winning regulatory approval around the world.

AB InBev will argue that as it has no direct market share in Australia, and although some of its beers such as Corona, Stella Artois and Budweiser are sold here via third-party distributors, its takeover of SABMiller will simply maintain its slot as the second-biggest brewer in Australia with a 39 per cent market share.

SABMiller controls Australia’s Carlton, Fosters and Victoria Bitter brands.

Lion, owned by Japanese conglomerate Kirin, will still keep its spot as the nation’s biggest brewer through its Tooheys, XXXX, Hahn and Boags brands, with a market share of 48 per cent, and there would be no disruption or shift in share at retailers, bottle shops, pubs and hotels, AB InBev will maintain.

Kirin has the rights to supply Corona in Australia, which accounts for around 5.9 per cent of the local market.

The ACCC investigation will examine the impact of the takeover on the local distribution of Corona, Australia’s fourth-biggest selling beer.

Of the 48 per cent slice of national beer volumes controlled by Lion, it is estimated only 8 per cent comes from beers owned by AB InBev. Also relying on precedent, AB InBev is expected to argue that the ACCC’s waving through of SABMiller’s A$12.3 bln takeover of then No 1 brewer Foster’s Group in 2011 is a very similar situation to its own move for SABMiller.

The beer industry in Australia has long been a virtual duopoly but in recent years craft beers have gained an independent market share.

The ACCC in the past has investigated pub supplies amid claims the big beer companies attempt to force supply restrictions.

To close the huge merger deal, AB InBev will have to win regulatory approval in countries including Australia, the US, the European Union, China, South Africa, Colombia and India.

Should the acquisition fall apart, AB InBev would have to pay US$3 billion to SABMiller.

Together, AB InBev and SABMiller sell more than 30 per cent of the world’s beer.

27 January, 2016