ACCC says Asahi-CUB deal could reduce competition in cider and beer
Australia’s competition watchdog has raised preliminary concerns over the proposed $16 billion acquisition of Carlton & United Breweries (CUB) by Japanese beverage giant Asahi.
The ACCC is concerned that merging the two largest suppliers of cider will reduce competition in the cider market and may also reduce competition in beer.
“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 has argued that cider and beer are part of the same market, but the ACCC sees this differently, and says drinkers do not readily switch between beer and cider.
The watchdog also has concerns about reduced competition in the highly concentrated beer market.
Asahi’s beer brands, including Asahi Super Dry, Peroni, Mountain Goat, Cricketers Arms and Two Suns, account for just 3.5 per cent of beer sales in Australia, but the ACCC is worried that Asahi may act as a competitive constraint on CUB and Lion, and said it has the potential to be “an even bigger threat in future”.
“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,” Sims added.
The ACCC said many market participants expressed concerns about the proposed deal in its discussions. A final decision will be made on March 19, 2020.