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India antitrust body fines United Breweries, Carlsberg in price fixing case

EconomySep 24, 2021 11:46AM ET
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© Reuters. FILE PHOTO: Carlsberg beer cans are seen at a pub in Mumbai, India, October 20, 2018. Picture taken October 20, 2018. REUTERS/Danish Siddiqui/File Photo

By Aditya Kalra and Abhirup Roy

NEW DELHI (Reuters) -India's antitrust watchdog on Friday imposed a penalty of $102 million on Heineken-controlled beer giant United Breweries and $16 million on the local unit of Denmark's Carlsberg (OTC:CABGY) in a case related to cartelisation of beer prices in the country.

The order comes after a long-drawn investigation that in 2018 saw Competition Commission of India (CCI) raiding the offices of the brewers. The raids happened after rival Anheuser Busch InBev told the watchdog it had detected an industry cartel in India after it acquired operations of SABMiller (LON:SAB) Plc.

A detailed CCI investigation, reported by Reuters last year, found that the companies collectively strategised in seeking price increases in several states, forging a cartel.

In a final order published Friday, the CCI announced penalties of 7.5 billion rupees on United Breweries and 1.2 billion rupees on Carlsberg, after the amounts were lowered as the companies cooperated with the investigators.

AB InBev was given a 100% exemption from penalties in the case as it alerted the CCI about the cartel, the order added.

The order passed by CCI imposed a penalty of $23,684 on Carlsberg India Managing Director Nilesh Patel and $6,497 on United Breweries chief of sales Kiran Kumar, among others.

Heineken (OTC:HEINY) said United Breweries has recently become part of Heineken, which itself was not part of the CCI investigation. "We are currently reviewing the (CCI) decision and will consider our next steps, including the possibility of lodging an appeal," Heineken said.

United Breweries said it was reviewing the CCI order. Kumar did not respond to an email seeking comment.

A Carlsberg spokesperson also said the company was reviewing the order and there was no comment on behalf of Patel, while a spokesperson for AB InBev India said the company was "pleased with the outcome of this order."

The CCI "directs the parties to cease and desist in future from indulging" in such activities, said the watchdog's 231-page order, which also imposed penalties on several company executives it said were involved in price fixing at the time.

The order casts a shadow on the three brewers, which account for roughly 88% of India's $7 billion beer market. Typically, companies file legal challenges against such CCI's decision.

India's alcohol market has complex rules. States regulate taxes and prices, which are every year approved by local authorities. Collectively deciding on price increases gave them companies more bargaining power with authorities.

"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.

The investigation conducted by CCI's investigation arm had said "the collusion ... has been mostly through the highest level of management in these companies," including managing directors, vice presidents, and sales and marketing heads, Reuters reported last year.

India antitrust body fines United Breweries, Carlsberg in price fixing case
 

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