CCI penalises beer companies for cartelisation, UBL slapped Rs 750 cr penalty

The Competition Commission of India has passed a final order against three beer companies — United Breweries Ltd (UBL), SABMiller India Ltd (now renamed Anheuser Busch InBev India Ltd) and Carlsberg India Private Ltd (CIPL) for indulging in cartelisation in the sale and supply of beer.

The competition regulator has imposed a penalty of Rs 750 crore on UBL and Rs 120 crore on CIPL based on the evidence presented on their act of cartelisation.

Allegations of cartelisation were levelled against these companies in various states and Union Territories, including through the platform of All India Brewers’ Association (AIBA).

As AIBA was found to be actively involved in facilitating such cartelisation, the CCI also held it to be in contravention of the provisions of Competition Act, 2002.

The period of cartel was held to be from 2009 to at least October 10, 2018 (the date on which the Director General conducted search and seizure operations at the premises of the beer companies, with the CIPL joining in from 2012 and AIBA serving as a platform for facilitating such cartelisation since 2013. All three beer companies were lesser penalty applicants before CCI.

Based on evidences of regular communications between the parties collected by the DG during search and seizure, and on the basis of the disclosures made in the lesser penalty applications, the CCI found that the three companies engaged in price co-ordination in contravention of the provisions of Section 3(3)(a) of the Competition Act.

The legal provisions were not followed in Andhra Pradesh, Karnataka, Maharashtra, Odisha, Rajasthan, West Bengal, the National Capital Territory of Delhi and the Union Territory of Puducherry, in collectively restricting supply of beer in Maharashtra, Odisha, and West Bengal.

The companies were also found to be in contravention of legal provisions in sharing of market in Maharashtra as well as co-ordination with respect to supply of beer to premium institutions in Bengaluru in contravention of the provisions of Section 3(3)(c) of the Act.

The CCI also found co-ordination amongst UBL and AB InBev with respect to purchase of second-hand bottles. Further, four individuals of UBL, four of AB InBev, six of CIPL and the Director General of AIBA, were held by the CCI to be liable for the anti-competitive conduct of their respective companies/association, in terms of Section 48 of the Act.

Giving benefit of reduction in penalty under the provisions of Section 46 of the Act of 100 per cent to AB InBev and its individuals, 40 per cent to UBL and its individuals and 20 per cent to CIPL and its individuals, the CCI directed the UBL and the CIPL to pay penalties of approx Rs 750 crore and Rs 120 crore respectively, besides passing a cease-and-desist order.