Carlsberg, SABMiller and United Breweries fixed beer, says report. Top executives of Carlsberg, SABMiller and India`s United Breweries (UB) exchanged commercially sensitive information and colluded to fix beer prices in India over 11 years, according to a government antitrust investigation report seen by Reuters.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

The Competition Commission of India (CCI) in 2018 raided the offices of the three brewers and started an inquiry. The investigation`s findings - which are not a final judgment of wrongdoing - cast a shadow on the brewers, which account for 88% of India`s $7 billion beer market. (https://reut.rs/2yxSfsw)

Watch Zee Business Tweet Video Below:

https://reut.rs/2JeQKEs)

Under the programme, the CCI can reduce the penalties it imposes on companies depending on the cooperation they provide. In this case, 19 beer executives engaged in anticompetitive practices, the CCI`s investigation report says.

"The collusion ... has been mostly through the highest level of management in these companies," the report said, including managing directors, vice presidents, and sales and marketing heads.

When the CCI asked former Carlsberg India managing director Michael Jensen whether the company "was actively coordinating with its competitors on pricing issues, and taking utmost care so as not to leave any documentary evidence", the report said "his reply was a clear admission". Jensen declined to comment.

Some discussions took place over WhatsApp, the report says. The report shows that in 2013, the chief sales officer of UB, Kiran Kumar, and then-managing director of SABMiller, Shalabh Seth, exchanged WhatsApp messages to plan a 60 rupee (81 cent) price increase per case of beer in a particular state.

According to the report, Seth wrote in one message: "Pls arrange msg to other friends". The CCI said that indicated "that other competitor companies were also coordinating with them".

Seth - who now works at UB - and Kumar said in separate statements that they had extended "full cooperation" to authorities and would make submissions to the CCI. They both declined to comment further.

"STARVE THE MARKET"

Collaborating on price increases gives companies higher negotiating power and avoids a price war while deterring healthy competition and hurting consumers, antitrust experts said.

India`s alcohol market has complex rules. States regulate taxes and prices, which are every year approved by local authorities.

Tax earnings on alcohol also form a major part of state revenue in India, and the investigation said the beer companies had held talks at least three times between 2015 and 2018 to create artificial scarcity and pressure governments on policy changes.

India`s antitrust law says such agreements are anti-competitive.

Carlsberg told the CCI that after a pricing policy change in eastern Odisha state in 2015, all companies "decided to limit supply of beer".

One early 2018 internal e-mail from Carlsberg`s vice president for growth markets at the time, Nilesh Patel, refers to a similar strategy deployed in Maharashtra state.

A fall in the state`s sales in 2017 "was primarily driven by conscious decision" by UB and Carlsberg to "starve the market post Excise (tax) hike", Patel wrote.

See Zee Business Live TV Streaming Below:

Patel, who is now Carlsberg`s India managing director, declined to comment.