Big brewers face competition probe in Oz

Two of Australia’s biggest brewers are facing an investigation into whether they breached competition laws after claims they are aiming to shut out smaller brewers and monopolise the market.

According to The Sydney Morning Herald, Australia’s leading media company, Fairfax Media, has obtained a number of emails from 2012 and 2013 that it claims show Lion and Carlton & United Breweries (owned respectively by Kirin and SABMiller) have tried to tie landlords into deals which gives them a virtual monopolyon beers and ciders served on tap.

The Australian Competition and Consumer Commission (ACCC), said the Herald, began a confidential investigation into the breweries, initially targeting New South Wales, in January this year and have visited several brewers and publicans in recent weeks.

One email Fairfax claimed to have in its possession was from an executive at CUB to a landlord in Melbourne suggesting that the publican ditch the craft beer he had on tap and switch to a CUB product.

The executive is said to have added that he would “donate” the first keg for free and that if the beer was sold at the same price as a schooner but in a small glass, “that gives you an extra A$50 per keg”.

Another, also from CUB, apparently shows that the brewery had managed to tie up 80% of the taps at one venue, while one from Lion apparently demands 100% of tap space at another pub.

A spokesman for CUB told the Herald that contracts between a brewery and publican were not unusual and often came with discounts on kegs as well as “investment” in the pub such as the installation and maintenance of new taps and tap lines and fridges.

Furthermore, they are not illegal the question the ACCC is charged with investigating is whether, at times, these deals “substantially lessen competition”.

The draught beer market is particularly fierce in Australia. Worth A$2,5 billion a year, 95% of it is produced by Lion and CUB (around 47.2% and 43.9% respectively) through their VB, Carlton, Tooheys and XXXX brands.

Draught beer is also subject to 40% less excise tax making it more lucrative than bottled beer. Craft beer meanwhile, IBISWorld reported, represents only 2% of the Australian market but consumption is rising by 13% a year while the number of craft breweries has grown from 86 to 175 in a decade.

The ACCC investigation is on-going.