Cartelisation: CCI Fines Beer Companies

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admin November 5, 2021
Updated 2021/11/05 at 12:51 PM
Fresh beer filling the glass directly from the tap. With extra foam spilling over glass.

United Breweries, SAB Miller India (now AB InBev), and Carlsberg India Pvt Ltd (CIPL), according to the Competition Commission of India (CCI), engaged in cartelisation in the sale and supply of beer in different States and Union Territories.

The Competition authority has levied severe fines against these three firms, all of which are owned by foreign owners with a worldwide presence in the alcoholic beverage sector. While United Breweries was hit with a penalty of 750 crore (after the CCI reduced the penalty by 40%), Carlsberg India was hit with a penalty of 120 crore (after 20 per cent reduction). AB InBev, which had purchased SAB Miller, was not penalised because CCI approved a 100 percent reduction in the penalty that would have been levied on them. All of the businesses had applied for reduced fines.

The businesses are likely to challenge the CCI decision in court. However, there is no official statement on the subject. “We can confirm that the CCI handed down its decision today. Carlsberg India spokesman stated, “We are presently examining it with our lawyers and have no further remarks at this time.” “We are reviewing the order and will decide on future course of action,” a United Breweries spokesman said.

“The CCI determined that we were the only business listed as getting no penalty at all, noting that we had ‘implemented internal decisive remedial administrative actions’ and ‘implemented extensive compliance programmes for its workers.’ We are delighted with these remarks since we take compliance and ethics extremely seriously at AB InBev India,” a spokesman for the company said.

Organizing a cartel

The All India Brewers’ Association (AIBA) has been chastised by the CCI for its active role in promoting cartelisation. The cartel was said to have existed from 2009 until at least October 10, 2018 (the day on which the Director General conducted search and seizure operations at the beer firms’ facilities), with CIPL joining in 2012 and AIBA acting as a platform for enabling such cartelisation since 2013.

Meanwhile, the Bombay Stock Exchange has asked United Breweries (a listed company) for clarification on media reports on CCI’s fine.

The conclusions of the CCI

CCI discovered that the firms engaged in price coordination in Andhra Pradesh, Karnataka, Maharashtra, Odisha, Rajasthan, West Bengal, Delhi, and Puducherry, and in restricting supply of beer in Maharashtra, Odisha, and West Bengal, based on evidence of regular communications between the parties collected by the DG during search and seizure and disclosures made in the lesser penalty applications.

In terms of purchasing used bottles, CCI discovered coordination between UBL and AB InBev. In addition, CCI found four people from UBL, four individuals from AB InBev, six individuals from CIPL, and the Director General of AIBA to be responsible for their respective companies’/associations’ anti-competitive behaviour under Section 48 of the Competition Law.

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