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ACCC explains contract decision in diverse market

July 13, 2017
By

ACCC Deputy Chair Michael Schaper

The ACCC has explained its findings on tap contracts saying its investigations had revealed a “very mixed picture” in the beer market.

ACCC Deputy Chair Michael Schaper told Brews News that at one extreme there is a number of small brewers saying they were finding it hard to get market access, but at the same time many reported they were able to get access to taps.

“We found individual venues saying, ‘even though I am contracted in practice, if I want to bring in a craft brewer there’s no objection or no problem’,” Dr Schaper explained.

“We had other venues saying, ‘look I am really not getting much demand from my customers so I am not all that interested in bringing in craft brewers’.”

The ACCC’s investigation included an examination of contracts and practices at 36 venues in  markets craft brewers identified as problematic.

“There wasn’t a strong and consistent theme of a concerted effort to lock out brewers, but rather a very diverse picture,” Dr Schaper said.

“That being the case it would be extraordinarily difficult to convince a court that there’s a substantial lessening of competition in the beer market because that’s not what the evidence showed,” he said.

He explained that in Australian competition law exclusive contracts are of themselves not illegal, unless they lead to “a substantial lessening of competition.”

“Unlike our European counterparts, the ACCC – a bit like a police force – can only presecute,” he explained.

“But only the courts can decide it and so we have to convince the court that it’s a substantial lessening of competition.”

He said that there is now a substantial body of precedent that says courts must look at the at the whole of the market.

“And so for individual businesses, you can be sitting there saying, ‘I can’t get a contract, I can’t get into a particular venue, surely that is illegal’.”

“And the answer is the test is the impact on the whole market, and also the guiding framework for judges is about what’s the impact on consumers.”

“Which is not a great deal of consolation if you are the individual brewer sitting there thinking why can’t I do this [get a tap].”

Dr Schaper said the big picture of the market is that overall sales of beer are declining but craft breweries are taking over an increase in market share.

“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.”

“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.”

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