Australia: Independent Brewers Association disappointed by approval of CUB takeover

The Independent Brewers Association (IBA) has expressed its disappointment with the Australian Competition and Consumer Commission (ACCC) over its decision to allow Asahi’s acquisition of Carlton & United Breweries (CUB) to go ahead, The Shout reported on April 3.

The IBA has consistently opposed the deal, saying that Asahi helped to provide competitive pressure on CUB and Lion and said the competition watchdog has “thrown draught beer drinkers to the wolves” in allowing the deal to happen.

“The move by Asahi to acquire CUB is an admission that this space is already too concentrated and that the only way to break into the draught beer market is to acquire businesses with existing tap contracts,” said Peter Philip, IBA Chair.

“The large brewers know this and use their scale and resources to implement a number of restrictive business practices which have severely constrained the growth of small independent brewers when it comes to on-premise supply of draught beer.

“The loser here will be consumers as these multinational Goliaths use their massive balance sheet and nearly unlimited resources to further dominate beer taps in pubs across the country, effectively shutting out small independent breweries.”

In order for the deal to happen Asahi must divest Stella Artois and Beck’s along with three cider brands, Strongow, Bonamy’s and Little Green, but the IBA dismissed this as a “token undertaking”.

The association says that the two beer brands in particular make up such a small percentage of taps in pubs as to be meaningless in balancing out the anti-competitive nature of the acquisition.

Philip added: “It’s really disappointing to see that the ACCC thinks that the profit of big multinational businesses outweigh the impact that this merger will have on small family-owned Aussie brewers.”

The IBA is now undertaking a consumer campaign which is aimed breaking open tap contracts and allowing more room for small independent breweries.

“This practice has gone on too long and the unwillingness of the ACCC to step in to protect consumer choice means that we need to take this to the highest levels of Government,” Philip said.

“All we’re asking for is a level playing field, surely having an open and competitive beer market is good for consumers. Isn’t the role of the ACCC to ensure Australian’s have the widest choice of beers available at the best price?”

The ACCC said it would not oppose Asahi’s $16bn acquisition of CUB after Asahi agreed to divest the two beer and three cider brands.

ACCC Chair Rod Sims said: “The ACCC was concerned that without the divestments, the proposed acquisition would substantially lessen competition in the cider market and remove a vigorous and effective competitor in the beer market.

“Without the sale of five beer and cider brands including Strongbow and Stella Artois, the combined Asahi-CUB company would have accounted for two thirds of cider sales in Australia, and owned the two largest cider brands, Somersby and Strongbow.

“We determined that Asahi selling the beer and cider brands would be sufficient to address our competition concerns and provide an opportunity for another business to play an important role in a relatively concentrated industry.”

03 April, 2020