Asia Brewers Network

“Avoid getting caught” – Mega breweries face $250m fine in India

16th December 2020
Fermentis

According to an Indian government anti-trust investigation report seen by the Reuters newsagency top executives at Carlsberg, SAB Miller and India’s United Breweries (UB) exchanged commercially sensitive information and colluded to fix beer pricing in India over a period of 11 years between 2007 and 2018.

The offices of the three brewery giants were raided by the Competition Commission of India (CCI) in 2018 and hundreds of files, data from laptops, thumb drives and mobile phones were seized.

The investigation had been triggered by AB InBev during their investigations into SABMiller’s activities following their 2016 takeover.

They had discovered evidence of cartel and anti-competitive activity and took advantage of the CCI’s ‘leniency programme’ that encourages corporate whistleblowing. Since 2018 both Carlsberg and UB have also filed applications under the same programme.

It is believed that 19 executives employed at the time by the three mega breweries, who account for 88% of India’s US$7 billion beer market, colluded to fix beer pricing throughout the sub-continent.

Evidence was found to suggest these executives regularly worked together to pressure states into accepting price increases to their products and restrict state alcohol tax hikes.

India’s individual states rely heavily on money raised from alcohol taxation to boost revenue.

In one case of collusion in 2015 the executives purportedly decided to limit beer supply to Odisha state because they were unhappy with a change in pricing policy by the state government.

A similar alleged incident happened in 2017 in Maharashtra state when the local government there decided to increase the excise tax on beer.

The report found that the executives also used the All India Brewers Association (AIBA) as a platform to help them fix prices and lobby local governments.

The Director General of the organization being found to have at one time sent an email stating “We should avoid getting caught”, referring to their collusion.

The CCI is still considering the evidence presented in the draft report and it is believed the three breweries could be facing fines totalling up to US$250 million.

 

Article by:

Charles Guerrier

Charles Guerrier

Charles founded SEA Brew in 2015 and is now responsible for the running of the Asia Brewers Network and associated activities. He travels extensively throughout the region putting his Beer Sommelier accreditation to good use.

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