The ACCC is seeking industry views about the impact Asahi’s proposed purchase of Australia’s largest brewer, CUB will have on competition in the beer market.
In a letter to interested parties, the ACCC advised it is is focused on whether whether Asahi and CUB currently compete closely for the supply of beer, cider and spirits
products and the the likely impact the proposed purchase will have on on beer prices.
The consumer watchdog is also looking at the extent to which large customers, such as supermarket chains, hotel groups or distributors, could sponsor entry or expansion by a rival supplier if the proposed acquisition were to result in a price increase.
The letter notes that the legal test which the ACCC applies in considering the proposed acquisition is in section 50 of the Competition and Consumer Act 2010 which prohibits acquisitions that are likely to have the effect of substantially lessening competition in a market.
In 2016 the watchdog said it would not oppose the proposed acquisition of SABMiller by Anheuser-Busch InBev saying that acquisition would not substantially lessen competition in the Australian beer market.
“The ACCC found that the proposed acquisition would not significantly change the current market structure. The two largest suppliers of beer in Australia are Lion and SABMiller, which owns Carlton & United Breweries (CUB). While AB InBev’s brands have been successful in Australia, particularly Corona, they have previously been distributed via either Lion or CUB. AB InBev has only a limited direct company presence in Australia and does not brew beer here,” ACCC Chairman Rod Sims said at the time.
“The ACCC considers that the proposed acquisition is unlikely to result in higher beer prices for consumers,” Mr Sims said.
In 2005 the ACCC also decided not to oppose Lion’s proposed purchase of Coopers saying that it was “unlikely to result in a substantial lessening of competition”.
Despite the unlikelihood of the watchdog taking action in this case, Independent Brewers Association chair Jamie Cook said the body would be putting in a submission to the inquiry.
He noted that while this purchase will take the combined business’ market share over 50 per cent, this wasn’t new.
“CUB had 55 per cent in the 1990’s,” Cook noted.
“Unfortunately in Australia, just about every industry is a duopoly and the ongoing concerns that Australian consumers should be thinking about is we have let concentration of markets go much beyond that, in the grocery market the two grocers have 85 percent of the market.”
“Fifty per cent market share is on the lower end in the Australian market.”
However he said that the IBA’s submission would focus on the impacts the purchase would have on access to market for small brewers.
“The flow-on effect [of market concentration] is around market access and the impact that has. The challenge is the combined share the two big brewers will have is 90 per cent and the impact that has on people’s ability to access the market.”
He said that the submission was the IBA’s opportunity to put the tap contract issue back on the table after the ACCC declined to take action on the matter in 2017.
“The combined entity (Asahi/CUB) probably has a greater share of the market place in terms of tap contracts than they do of total beer.”
“The ongoing challenge of getting access to taps in that environment is pretty tough.”
The ACCC requires responses by 5pm on 6 September 2019 and expects to make a decision on 31 October.