The Australian Competition and Consumer Commission will not oppose Asahi Group Holdings’ proposed acquisition of Carlton & United Breweries (CUB). ACCC said the acquisition can go ahead after Asahi has divested two beer and three cider brands.
In a statement Asahi said it welcomed the announcement.
The $16 billion acquisition was originally proposed in July 2019. At the time Asahi said it would acquire CUB's broad distribution network as well as benefits from a greater scale of operations in areas such as procurement (Food & Drink Business 23/07/2019)
In December the ACCC expressed its concerns. “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 (Food & Drink Business 13/12/2019).
In February it called for industry feedback on Asahi's proposed divestment of some of its cider and beer brands (Food & Drink Business 28/02/2020)
Brands to be sold
The cider brands Strongbow, Bonamy’s and Little Green cider brands and the Stella Artois and Beck’s beer brands are to be sold. The future buyer or buyers of these assets will need to be approved by the ACCC.
Asahi said the cider brands equate to about 20 per cent of the Australian cider market, with Strongbow being about 18 per cent.
The company has provided a court-enforceable undertaking to the ACCC to divest the five brands. It requires the company to ensure divested brands get the same access to bars, pubs and clubs as well as off-premise space under tap-tying agreements as Asahi’s brands for the next three years.
ACCC chair Rod Sims said that while Asahi supplies only a “relatively small share” of beer sales in Australia, the ACCC was concerned the acquisition would remove a rival capable of competing strongly against Lion and CUB.
Sims said the regulatory authority “was concerned that without the divestments the proposed acquisition would substantially lessen competition in the cider market and remove a vigorous and effective competitor in the beer market.
“Without the sale of five beer and cider brands including Strongbow and Stella Artois, the combined Asahi-CUB company would have accounted for two thirds of cider sales in Australia, and owned the two largest cider brands, Somersby and Strongbow.
“We determined that Asahi selling the beer and cider brands would be sufficient to address our competition concerns and provide an opportunity for another business to play an important role in a relatively concentrated industry.”
Asahi and CUB currently compete closely in the sale of premium international beers, he said.
Margin said: “Many of these brands are well known brands and Asahi Beverages believes that they would attract strong interest from suitable buyers who wish to compete in beer and cider.”
CUB’s parent, AB InBev, has also provided a court-enforceable undertaking to facilitate and not unreasonably withhold consent to the transfer of relevant beer brand rights and obligations to the future buyer or buyers.
If the ACCC approves the deal, Asahi Beverages will undertake a process to find a suitable buyer for the above-mentioned brands.
Background
In Australia, Asahi’s beer brands include Asahi Super Dry, Peroni, Cricketers Arms, Grolsch, Mountain Goat, and Two Suns. In cider, Asahi licences Somersby cider (from Carlsberg).
CUB’s beer brands include Victoria Bitter, Carlton Draught, Fat Yak, Crown Lager, Foster’s and Balter. CUB also licences and distributes a range of other beer brands including Corona, Stella Artois, Beck’s and Budweiser. CUB’s cider range includes Strongbow, Mercury, Bonamy’s, Little Green, Spring Cider Co., Dirty Granny and Pure Blonde Cider. CUB also manufactures and distributes Bulmers under licence from Heineken.
