Kegstar’s proposed acquisition of collapsed Konvoy’s assets has been opposed by the Australian Competition and Consumer Commission (ACCC) due to the risk of lessening competition.
According to the ACCC, Kegstar and Konvoy are the only suppliers of keg pooling services, which lets brewers rent kegs on a short-term basis to supply alcoholic drinks on tap to licensed venues.
Following an investigation, the regulator found that the deal would substantially lessen competition, as Kegstar could increase prices above a competitive level and reduce services or quality of service for customers.
While independent brewers can use their own kegs or leased kegs, the ACCC considers that these options generally serve different purposes and would not be a viable alternative should keg pooling prices increase.
Kegstar is the Australian subsidiary of MicroStar, the largest independent keg services company in the US. In Australia, Kegstar handles the activities and costs relating to a brewery’s keg use (for example, keg capital costs, reverse logistics, repair and maintenance, and keg management labour) under a pay-per-fill (PPF) model.
Konvoy operates a keg services business in the country, providing keg rentals on both short-term and long-term basis. The company entered receivership and administration in March, with receivers deciding that a sale of its assets would provide the best return to creditors.
“Our view is that if the proposed acquisition does not proceed, the Konvoy business is likely to continue, whether under new or existing ownership; however, we recognise that liquidation of the assets is also a potential outcome,” said ACCC commissioner Philip Williams.
“If Konvoy’s assets are liquidated, they would likely remain in the market and be available to new or emerging rivals to MicroStar, or to independent brewers,” he added.
