Denmark's Carlsberg and India's United Breweries have filed pleas with Indian authorities, seeking leniency in a probe into alleged collusion to fix beer prices, five sources familiar with the matter told Reuters.
Denmark’s Carlsberg and India’s United Breweries have filed pleas with Indian authorities, seeking leniency in a probe into alleged collusion to fix beer prices, five sources familiar with the matter told Reuters.
The Competition Commission of India (CCI) has been investigating the two companies, as well as the world’s largest brewer Anheuser-Busch InBev (AB InBev).
Last year, as previously reported by Reuters, AB InBev told the regulator 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 whistleblower-protection scheme led to dawn raids by the regulator in October at offices of all three of the brewers.
In recent weeks, both Carlsberg and United Breweries filed pleas under the CCI’s so-called leniency programme, 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, did not respond to requests for comment. Following the Reuters 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 they take antitrust compliance “very seriously”, but declined to comment further.
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The three brewers account for 90 percent of beer consumption in the $7 billion Indian market, where rising social acceptance towards drinking and a growing pub culture are helping the industry to grow.
They collectively face an estimated fine of up to $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 programme 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,” said one of the sources.
The CCI did not respond to questions from Reuters.
Gautam Shahi, a New Delhi-based antitrust lawyer, said subsequent leniency applications were typically filed to reduce potential penalties.
“It’s a promise of cooperation in return for a 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 violating Indian anti-trust laws, a government source said at the time.
One of the sources told Reuters the CCI was still collecting evidence and reviewing the various leniency petitions but the investigation would be likely to continue for a year.
United Breweries is known for its Kingfisher brand while AB InBev’s beer brands include Budweiser, Corona and Stella Artois. Carlsberg sells beer under its own-name brand among others and also owns Tuborg.
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.