Australia’s competition watchdog ACCC has raised concerns about AB InBev’s proposed sale of Carlton and United Breweries (CUB) to Asahi Group Holdings, ahead of a final decision in March. The initial deal was announced earlier this year, for a price of $11.3 billion.
The ACCC has said that the acquisition of AB InBev’s Australian subsidiary will reduce competition in the market for cider and could also affect the beer market.
ACCC chair Rod Sims said: “The proposed acquisition would combine the two largest suppliers of cider in a highly concentrated market.
“A combined Asahi-CUB would control the Somersby, Strongbow, Mercury and Bulmers cider brands, which account for about two thirds of cider sales. We are concerned that the proposed acquisition may lead to higher cider prices.
“Asahi argued to us that cider and beer are part of the same market, but our preliminary view is that cider is a separate market and drinkers do not readily switch between beer and cider.”
As part of the deal, Asahi will acquire CUB’s brands, such as Carlton Draught, Crown Lager, Budweiser, Foster’s and Little Green. The Tokyo-based company will add these brands to its portfolio that already includes Pilsner, Peroni and Somersby.
Sims added: “While Asahi is currently a relatively small brewer in Australia, accounting for approximately 3.5% of beer sales here, our preliminary view is that Asahi may act as a competitive constraint on the two largest beer brewers, CUB and Lion, and has the potential to be an even bigger threat in future.”
The ACCC suggests that keeping Asahi in the market as a competitor to CUB and Lion may help ‘to keep a lid on beer prices’.
Asahi has responded saying that it is working collaboratively with the ACCC to respond to the Commission’s questions.
Chairman of Asahi Beverages Peter Margin said: “Asahi’s acquisition of CUB is a significant one. We always expected that the review process would take some time, and we support the ACCC’s diligent and robust approach.
“We are working towards completing the deal as soon as possible once we have received regulatory approvals.”
The ACCC has invited submissions from parties by 22 January 2020. A final decision is scheduled for 19 March 2020.
© FoodBev Media Ltd 2019