The Australian Competition and Consumer Commission (ACCC) has today deemed that the tap contracts of Carlton & United Breweries (CUB) and Lion are “unlikely to substantially lessen competition” for craft brewers.
An investigation into the contracts of CUB and Lion was launched in 2014 after allegations from some craft brewers claimed that major brewers were locking them out of beer taps in pubs, clubs and live venues through the use of exclusivity provisions and volume requirements.
It was said that the contracts in question were requiring venues to dedicate more than 80 per cent of beer taps to their big name brands in exchange for rebates, infrastructure investment and refurbishment loans.
Mazan Hajjar, Founder of Hawkers Beer, who is currently building a class action against CUB and Lion, told Beer & Brewer that he is “absolutely not surprised by the ACCC’s findings”.
“It took them forever to come to the conclusion of no conclusion.”
During the course of the three year investigation, the ACCC examined the contracts and practices at 36 venues across New South Wales and Victoria.
“I think it’s a half assed, underfunded, toothless, bureaucratic study on something that is well beyond the realms of their understanding,” said Hajjar.
“Just to put it into perspective, we currently don’t have Western Australia or Northern Territory in our database and we have already something like 40,000 liquor licences. So to come to the conclusion by investigating 36 venues is idiotic. And to ask the venues if they feel restrained by the contract that they signed is idiotic.”
Meanwhile, ACCC Deputy Chair Dr Michael Schaper says the investigation found that “While some craft brewers may have been refused access to taps by certain venues, our investigation found that the venues were responding to consumer demand for certain beer brands, rather than restrictions imposed by the big brewers.
“In fact, over half of the venues contacted by the ACCC indicated that customer preference was the key factor in determining the brands, types of beer and number of craft beers offered by the venue.”
But Hajjar believes that the ACCC is “basically an underfunded toothless tiger and anyone who was under any impression that they would ever come up with anything was crazy.”
He told Beer & Brewer that the decision is “almost funny”.
“If it wasn’t so sad it would be funny that they’ve come to this conclusion at a time when in the rest of the world every other day there is another story of seven figure fines being handed to people behaving uncompetitively.
“If you look at the US and the European beer market it’s amazing. It’s amazing that the rest of the world is doing this while the ACCC has its head in the ground.
“I’m not at all surprised, I’m extremely disappointed and I find it bizarre that these underfunded bureaucrats have gone against the conclusion of the rest of the world.”
The Independent Brewers Association (IBA) has described today’s decision by the ACCC to take no further action in relation to tap contracts as a body blow for the Australian independent brewing industry.
“This investigation has been dragging on for more than three years and to now find out that the status quo will be maintained is a bit hard to take,” said IBA Chair Ben Kooyman.
“For any small business to survive it needs protection from the market practices of dominant players. We had hoped that Australian consumer law, as interpreted by the ACCC, would be able to provide that protection. It seems we were wrong,” Kooyman said.
“The ACCC’s finding that tap contracts do not substantially lessen competition certainly does not match the realities faced by our members in the marketplace. We find it puzzling that the investigation seems to have focused on the venue’s experience rather than that of small brewers.”
The recently released IBA National Economic Evaluation showed that market access was considered the second greatest constraint to growth for independent brewers behind excise.
“Of course this decision will also affect the ability of Australia’s beer lovers to access the beers they want to drink.”
“The big winners from this decision are a select group of multi-national companies.”
The IBA vows to keep pursuing this issue as part of its on-going advocacy campaign for a fair go for independent brewers.