South Africa: Competition authorities reject Distell’s complaint against AB InBev

Distell is big enough to go toe to toe with AB InBev. But the brewer tried to use merger conditions designed to protect small producers to get ahead of its competitor, The Africa Report said on December 5.

That, in essence, is the South African Competition Commission’s reasoning in dismissing Distell’s referral of AB InBev for breach of merger conditions. The dispute centres on the definition of “ambient space” and exclusive stadium agreements entered into by AB InBev.

Distell, listed on the Johannesburg Stock Exchange, is the continent’s leading producer of wines, spirits and ciders. It is also the world’s second-biggest producer of ciders.

When the competition authorities granted conditional approval for AB InBev’s merger with SABMiller in late 2016, they stipulated that the global brewer must make provision for a 10% allocation of fridge space for rivals at outlets.

According to the Commission, in the context of an outlet, “ambient space” refers to shelving, floor space and cold storage. This provision was intended to ensure AB InBev does not abuse its dominant market position to muscle out smaller players.

Furthermore, competition authorities directed AB InBev not to induce outlet owners to exclude competitors from storing products.

Distell contended that the definition of “ambient space” is not clear enough and should extend to marketing.

Distell also accused AB InBev of paying “event organisers to exclude Distell from participating at their events”. The events in question are the WaterKloof Air Show and the Spring Day Festival, both held in Gauteng.

“Distell also alleged […] SAB/InBev contravened clause 7.2 of the conditions by entering into contractual agreements or requiring certain stadiums […] to preclude its competitors, including Distell, from sales and promotional opportunities,” according to the referral.

In its submission, Distell said that SAB requires and/or induces outlets not to offer space to Distell to make its products available and visible to consumers. SAB removes or requires the removal of Distell’s promotional and pricing materials from outlet-owned spaces.

The commission agreed that “the list in the definition of shelving, floor space and storage is not […] exhaustive because of the word ‘include’. However, we are of the view the list provided indicates the type of space the conditions envisage when it refers to ambient space,” it said.

In terms of events, Distell accused AB InBev of:

Proposing a deal to the organisers of the Spring Day Festival at Voortrekker Monument in Pretoria. SAB/InBev would pay R25,000 ($1,700) to exclude Distell from selling its products at the events.

Excluding Distell from offering its products within certain stadiums on the basis that SAB/InBev had entered into exclusivity contracts.

The Commission countered that conduct as it relates to exclusivity does not fall under the jurisdiction of the conditions.

09 December, 2019