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Contracts “unlikely to substantially lessen competition”: ACCC

July 13, 2017
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After a three-year investigation, Australia’s competition watchdog, the Australian Competition and Consumer Commission has found that tap contracts in the brewing industry are not anti-competitive.

The ACCC conducted the investigation into the contracts of Carlton United Breweries (CUB) and Lion Pty Limited (Lion) after allegations from some craft brewers that the major brewers were locking them out of beer taps in pubs, clubs and live venues through the use of exclusivity provisions and volume requirements.

The investigation examined contracts and practices at 36 venues across NSW and Victoria and found that their impact is unlikely to substantially lessen competition in any of the markets we investigated. However, the competition watchdog says it will continue to closely monitor conduct and developments in the market.

The complaints from craft brewers stemmed from some of Lion and CUB’s contracts requiring venues to dedicate over 80 per cent of beer taps to their big name brands in exchange for rebates, infrastructure investment and refurbishment loans.

“Although some venues had exclusivity arrangements, most pubs and clubs said they did not feel constrained from allocating taps to smaller brewers and could make taps available for craft beer if necessary,” ACCC Deputy Chair Dr Michael Schaper said.

Some contracts included minimum volume requirements that could make it harder for craft brewers to gain access to taps in these venues.

“While some craft brewers may have been refused access to taps by certain venues, our investigation found that the venues were responding to consumer demand for certain beer brands, rather than restrictions imposed by the big brewers,” Dr Schaper said.

“In fact, over half of the venues contacted by the ACCC indicated that customer preference was the key factor in determining the brands, types of beer and number of craft beers offered by the venue.”

A number of small brewers reported that they have been able to access venues that had contracts with a major brewer by selling both draught and packaged beer. Some noted successful entry after a marketing plan created brand awareness and consumer demand for their draught craft beer.

“There has been a significant growth in craft beer sales during the ACCC’s investigation and we will continue to monitor for anti-competitive behaviour,” Dr Schaper said.

 

More to come…

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