In a case involving cartelisation of beer pricing in India, the country’s antitrust watchdog levied a penalty of $102 million on Heineken-controlled beer giant United Breweries and $16 million on the local subsidiary of Denmark’s Carlsberg on Friday.
The ruling follows a lengthy inquiry that began in 2018, with the Competition Commission of India (CCI) searching the brewers’ offices. The inspections occurred after competitor Anheuser Busch InBev informed the watchdog that it had discovered an industry cartel in India after acquiring SABMiller Plc’s business.
A comprehensive CCI probe, published by Reuters last year, discovered that the firms collaborated to seek price hikes in many jurisdictions, forming a cartel.
The CCI levied fines of 7.5 billion rupees on United Breweries and 1.2 billion rupees on Carlsberg in a final ruling released Friday, after the sums were reduced as the firms worked with the inspectors.
The judgement also said that AB InBev was immune from any fines in the case since it notified the CCI about the cartel.
The CCI judgement fined Carlsberg India Managing Director Nilesh Patel $23,684 and United Breweries Chief of Sales Kiran Kumar $6,497, among others.
Heineken stated that United Breweries was recently absorbed by Heineken, which was not a subject of the CCI inquiry. “We are now evaluating the (CCI) judgement and will evaluate our future measures, which may include filing an appeal,” Heineken said.
United Breweries stated that it will be examining the CCI order. Kumar did not reply to a request for comment through email.
A Carlsberg spokesman said the firm was studying the judgement and had no response on Patel’s behalf, whereas a AB InBev India spokesperson said the firm was “pleased with the outcome of this order.”
In its 231 page order, the CCI noted that the agency “directs the parties to cease and desist in future from indulging” in such activities. In the order, penalties on several company executives were also imposed by the CCI who according to the agency were allegedly a part of the price fixing process at that point in time.
The injunction has a negative impact on the three brewers, who control about 88 percent of India’s $7 billion beer industry. Companies generally pursue legal objections to such CCI decisions.
The alcohol segment in India is governed by complicated laws. States set taxes and prices, which are authorised by local governments each year. the companies collectively deciding on price hikes provided them greater bargaining leverage with the government.
“It seems that only to have a strengthened bargaining power against the State,” the companies “came hand-in-gloves with each other and shared their commercially sensitive information,” the CCI order said.
According to Reuters, the probe undertaken by CCI’s probe arm found that “the collaboration… has been primarily via the top level of management in these firms,” including managing directors, vice presidents, and sales and marketing chiefs.
(Adapted from EconomicTimes.com)