Sat, Dec 15, 2018 - Page 10 News List

Carlsberg and United file pleas in India cartel probe

Reuters, NEW DELHI

Denmark’s Carlsberg A/S and India’s United Breweries Group have filed pleas with Indian authorities, seeking leniency in a probe into alleged collusion to fix beer prices, five sources familiar with the matter said.

The Competition Commission of India (CCI) has been investigating the two companies, as well as the world’s largest brewer, Anheuser-Busch InBev SA/NV (AB InBev).

Last year, AB InBev told the regulator that it had discovered an industry cartel that discussed and agreed on beer prices before submitting them to Indian states, which regulate pricing.

The company’s confidential disclosure under the CCI’s whistle-blower protection scheme led to dawn raids by the regulator in October at the offices of all three of the brewers.

In recent weeks, both Carlsberg and United Breweries filed pleas under the CCI’s so-called leniency program, submitting evidence and agreeing to cooperate, the sources said, adding that such cooperation could lead to a smaller fine if wrongdoing is discovered.

A Carlsberg spokesman in India said it was “cooperating fully with the CCI” and had done so from the beginning of the probe.

United Breweries, part-owned by Heineken SA, did not respond to requests for comment.

Following a story on the October raids, it told the Indian stock exchanges it was reviewing its legal risks and the potential implications.

Heineken declined to comment.

An AB InBev spokesman in India said the company takes antitrust compliance “very seriously,” but declined to comment further.

The three brewers account for 90 percent of beer consumption in the US$7 billion Indian market, where rising social acceptance toward drinking and a growing pub culture are helping the industry to grow.

They collectively face an estimated fine of up to US$279 million if found to have operated as a cartel.

Individual executives can also be fined, though AB InBev could escape all of its share of the fines as it reported the issue.

The CCI’s leniency program grants relief through lower penalties to subsequent applicants only if they add value to evidence already held by the regulator from its own investigation and from the initial applicant, in this case AB InBev, but the filings remain confidential and companies do not know of others’ submissions.

“It’s like playing blind, like in poker,” one of the sources said.

New Delhi-based antitrust lawyer Gautam Shahi said subsequent leniency applications were typically filed to reduce potential penalties.

“It’s a promise of cooperation in return for lenient treatment,” said Shahi, who is not involved in the case.

During the October raids, the CCI found e-mails that showed executives regularly discussed beer prices, potentially breaching Indian antitrust laws, a government source said at the time.

One of the sources said that the CCI was still collecting evidence and reviewing the various leniency petitions, but the probe would be likely to continue for a year.

The antitrust investigation is set to cast a shadow on the beer industry in India, which is already facing stringent compliance and state-level regulation, making it tougher for brewers to expand.

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