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  Business   Companies  26 Oct 2018  Beer firms to face price fixing probe

Beer firms to face price fixing probe

REUTERS
Published : Oct 26, 2018, 1:14 am IST
Updated : Oct 26, 2018, 1:14 am IST

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

New Delhi: 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 London-listed rival SABMiller Plc in 2016 had for years fixed beer prices along with Denmark’s Carlsberg and India’s United Breweries, which is part-owned 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 ex-brewery beer production prices to Indian state governments. Those ex-brewery 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 anti-trust laws, Reuters has 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.

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

Tags: competition commission of india, ab inbev, beer price