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The Competition Commission of India (CCI) has faulted three leading companies – United Breweries, SAB Miller India (now AB InBev) and Carlsberg India Pvt Ltd (CIPL) – for indulging in cartelisation in the sale and supply of beer in various States and Union Territories.
In its final order, against these three companies – all controlled by foreign owners who have a global standing in the alcoholic beverage industry – the Competition watchdog has imposed serious penalties. While United Breweries has been visited with a penalty of ₹750 crore (after 40 per cent reduction given by CCI to the penalty leviable), the CCI has imposed a penalty of ₹120 crore on Carlsberg India (after 20 per cent reduction). No penalty has been imposed on AB InBev, which had acquired SAB Miller, as CCI has allowed 100 per cent reduction on the penalty applicable to them. All the companies had made applications for lesser penalties.
The companies are expected to appeal against the CCI order. However, there is no formal word on this. “We can confirm that the CCI has passed the judgment today. We are currently reviewing it with our lawyers and have no further comments at this point,” said a Carlsberg India spokesperson. A spokesperson for United Breweries said, “We are examining the order and will decide on further course of action.”
“The CCI decided that we were the sole company identified as receiving no penalty whatsoever and noted that we had ‘initiated internal definitive corrective administrative measures’ as well as ‘initiated widespread compliance programmes for its employees’. We are pleased with these comments as we take compliance and ethics very seriously,” said an AB InBev India spokesperson.
Brewing a cartel
Even the the All India Brewers’ Association (AIBA) has been faulted by CCI for its active involvement in facilitating such cartelisation. The period of the cartel was held to be from 2009 to at least October 10, 2018 (the date on which the Director General conducted search and seizure operations at the premises of the beer companies), with CIPL joining in from 2012 and AIBA serving as a platform for facilitating such cartelisation since 2013.
Meanwhile, the Bombay Stock Exchange has sought clarifications from United Breweries (which is a listed entity) on the media reports on CCI’s penalty.
CCI’s findings
Based on evidences of regular communications between the parties collected by the DG during search and seizure, and based on the disclosures made in the lesser penalty applications, CCI found that the firms engaged in price co-ordination in Andhra Pradesh, Karnataka, Maharashtra, Odisha, Rajasthan, West Bengal, Delhi and Puducherry; in restricting supply of beer in Maharashtra, Odisha and West Bengal and in sharing of market in Maharashtra and co-ordinating to supply beer to premium institutions in Bengaluru in contravention of the provisions of competition law.
CCI also found co-ordination amongst UBL and AB InBev with respect to purchase of second-hand bottles. Further, four individuals of UBL, four individuals of AB InBev, six individuals of CIPL and the Director General of AIBA, were held by CCI to be liable for the anti-competitive conduct of their respective companies/association, in terms of Section 48 of the Competition law.