ACCC cites cider, beer concerns in Asahi takeover of CUB

Competition watchdog concerned about cider and beer markets if Japan’s Asahi takes over Carlton & United Breweries.

Carlton United Breweries (CUB) CEO Peter Filipovic. Picture: Aaron Francis

The competition watchdog has raised concerns over Asahi’s $16 billion purchase of Carlton & United Breweries from Anheuser-Busch InBev.

The Australian Competition and Consumer Commission released a statement of issues, potentially delaying the deal because of concerns about domination of the cider market.

The ACCC fears the deal may also reduce competition in the beer market.

Both Japan’s Asahi and CUB control over 30 per cent each of the cider market, so the combined firm would have over 60 per cent market share.

“The proposed acquisition would combine the two largest suppliers of cider in a highly concentrated market,” ACCC Chair Rod Sims said.

“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,” Mr Sims said.

READ MORE: Asahi may have to trim its assets | Asahi to buy CUB from Anheuser-Busch InBev for $16bn

The ACCC also voiced competition concerns about the beer market.

Should the deal proceed, Asahi would have over 50 per cent of the Australian beer market, with Asahi brands like Peroni and Mountain Goat linked to CUB brands including

Victoria Bitter, Carlton Draught, Cascade, Crown Lager, Matilda Bay, Fat Yak and Reschs.

Asahi collects 90 per cent of its earnings from beer and has 3.5 per cent of the Australian market, with rival Lion, which sells Boags and Furphy’s among other brands, holding 37 per cent of the 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.

“Our preliminary view is that having Asahi in the market as a competitor to the big two brewers may help to keep a lid on beer prices. This competitive presence, and the threat of Asahi growing more in the future, would be lost if this deal goes ahead,” Mr Sims said.

The ACCC has long held concerns over the big brewers’ control of hotels, with the potential to block boutique brewers from the market.

Asahi also sells Schweppes in Australia but beer is more profitable, with margins of about 30 per cent compared with soft drink at 15 per cent.

The ACCC has had the merger under consideration since the end of August.

A final decision is scheduled for March 19.

A spokeswoman for Asahi said it would work with the competition regulator on the issues it had raised.

“All parties involved are working collaboratively with the ACCC to respond to the

commission’s questions.”

Chairman, 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.”

A spokesman for AB InBev said: “We acknowledge the statement of issues published by the Australian Competition and Consumer Commission regarding the proposed sale of Carlton & United Breweries, our Australian subsidiary, to Asahi Group Holdings. We will continue to work with Asahi and the ACCC for approval of the deal and will provide the ACCC with all the necessary information to that end.”