The competition watchdog has stalled the $16 billion purchase of Carlton & United Breweries by Asahi, expressing fears the deal would reduce competition in cider, and may also reduce competition in Australia’s beer market.
“The proposed acquisition would combine the two largest suppliers of cider in a highly concentrated market,” said Australian Competition and Consumer Commission chairman Rod Sims.
If the Japanese brewer Asahi obtained Melbourne-based CUB, it would own cider brands accounting for about two-thirds of sales in Australia, Mr Sims said.
“We are concerned that the proposed acquisition may lead to higher cider prices,” he said.
“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,” Mr Sims said.
The competition boss also voiced “preliminary concerns” about what the $16 billion acquisition would mean for the country’s “highly concentrated beer market”.
“While Asahi is currently a relatively small brewer in Australia, accounting for approximately 3.5 per cent 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,” Mr Sims said.
CUB already accounts for about 45 per cent of Australian beer sales, making it easily Australia’s biggest seller of beer, figures released in the ACCC’s statement of issues show. Adding Asahi’s sales on top of that would give CUB a hefty 48.5 per cent market share, based on the ACCC’s figures.
In a media release outlining its position, the ACCC confirmed that “many market participants” had raised concerns about the $16 billion deal. In forming its view the ACCC spoke to a large number of stakeholders including alcohol retailers, licensed venues, competitors and industry groups.
The ACCC is calling for submissions from interested parties to its statement of issues by 22 January, and is scheduled to make a final decision on 19 March next year.
This article originally appeared in the Sydney Morning Herald. Read the original story here.