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Asahi proposes divestment of cider and beer brands to allay ACCC concerns over CUB deal

Chisinau Moldova February 12 2017: A bottle of Asahi Super. Asahi was founded in Osaka Japan in 1889 as the Osaka Beer Company.

Competition watchdog ACCC is inviting submissions from the alcohol industry about a proposed divestment of some of Asahi’s cider and beer brands that aims to quell competition concerns over Carlton United Breweries (CUB) deal.

The ACCC raised preliminary concerns about the acquisition in relation to competition in the cider and beer markets. The proposed deal by Asahi would see the beverage giant divest cider brands Strongbow, Bonamy’s and Little Green and its beers, Stella and Becks, to purchasers approved by the consumer watchdog.

“The release of the proposed divestment undertaking for public comment should not be interpreted as a signal that the ACCC will ultimately accept the undertaking and clear the transaction. We are following our usual practice of publicly consulting on a proposed divestment package. We are seeking feedback from industry participants on whether the divestment package will be sufficient to address the competition concerns,” ACCC chair Rod Sims said.

In December, ACCC said that Asahi and CUB’s cider brands closely rival each other. A combined Asahi-CUB would control the Somersby, Strongbow, Mercury and Bulmers cider brands, which account for about two thirds of cider sales. 

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”.

The ACCC noted that although Asahi’s beer has a low market share, it still appears to be a vigorous competitor to the two major beer suppliers. If the acquisition pushes through, this competition will be removed.

Asahi Beverages chairman, Peter Margin, said, “We understand and respect that the ACCC must undertake a thorough process to ensure that the deal does not reduce competition and is in the interests of consumers. Asahi’s acquisition of CUB is a significant one and we have always expected that the review process would take some time.”

“We are working towards completing the deal as soon as possible once we have received regulatory approvals from both the ACCC and the Foreign Investment Review Board.”

The ACCC is seeking views from market participants on whether the proposed undertaking would be likely to alleviate its competition concerns.

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