Beer firms to face price fixing probe

Ab InBev told authorities about cartel

New Delhi, Oct. 25: An Indian anti-trust probe into beer price-fixing allegations was initiated after the world’s largest brewer Anheuser-Busch InBev told the authorities last year it had detected an industry cartel, three people familiar with the matter told Reuters.

AB InBev discovered the Indian operations it acquired as part of its around $100 billion acquisition of Londonlisted rival SABMiller Plc in 2016 had for years fixed beer prices along with Denmark’s Carlsberg and India’s United Breweries, which is partowned by Heineken NV, the sources said.

AB InBev conducted an internal investigation in the first half of last year, after closing the SABMiller deal, and found that executives had discussed and agreed on their submission of exbrewery beer production prices to Indian state governments. Those exbrewery prices would include all the production and marketing costs, as well as a proposed profit margin, and were used by state governments to set a maximum retail price.

“It was startling,” one of the sources said. “Extensive pricing information about the competition, some of which is extremely confidential, was available to all the three companies.”

Earlier this month the Competition Commission of India (CCI) raided the offices of all the three brewers and found e-mails that showed executives were allegedly violating Indian antitrust laws, Reuters has

The probe will cast a further shadow on an Indian beer business that already faces stringent compliance and statelevel regulation, making it tougher for brewers to expand.

As part of its probe, CCI secured permission from a Delhi district judge to conduct search and seizure operations at the brewers’ offices, only the third such raids in the watchdog’s history.

previously reported.

According to the three sources, those raids came after AB InBev approached the watchdog to make disclosures under a so-called “leniency programme” that provides a whistleblower-type protection for cartel members disclosing wrongdoing.

Sudhir Mittal, chairman of the CCI, did not respond to a request for comment.

A spokesman for AB InBev, whose Indian offerings include Budweiser and Corona, said “it would not be appropriate for us to comment” for this article.

Carlsberg, which sells beer under its own-name brand and also owns Tuborg, said it was “committed to complying” with all relevant laws.

United Breweries, which commands a 51 per cent share of the Indian market and sells the Kingfisher and Heineken beer brands in India, did not respond to an e-mail seeking comment. Heineken declined to comment.

Calls to Shalabh Seth, the managing director of SABMiller in India at the time of the AB InBev acquisition, went unanswered. He now works for United Breweries.

After Reuters reported the CCI raids on Oct. 11, United Breweries told the stock exchanges the company took its compliance obligations seriously and was reviewing its legal risks and potential implications.

AB InBev has said it takes anti-trust compliance “very seriously”.

The three brewers, who according to Euromonitor International account for 90 per cent of beer consumption in the $7 billion India market, together face a potential fine of up to $272 million if they are found to have operated a cartel, the sources said. Any company executives found to have fixed prices could also be fined.

AB InBev could escape some or all of its share of the fines for self-reporting the issue. It was unclear how much the alleged price-fixing may have cost consumers.

— Reuters