New Delhi Bans Beer Giant Over Tax Evasion
New Delhi bans AB InBev – the world’s largest beer producer – from selling its products in the key New Delhi market for 3 years for evading local taxes.
The city government orders from earlier in July followed a 3-year investigation which found that beer maker SABMiller – acquired by AB InBev in 2016 for around $100 billion – used duplicate barcodes on its beer bottles supplied to city retailers that year, allowing it to pay lower levies.
AB InBev has denied the allegations and in a statement, said they will appeal against the decision.
The barcodes were being duplicated by … SABMiller and supplied to the retail outlets to evade payment of excise duty,” said a 19-page order, dated July 16, which detailed the findings, reports Reuters.
In a second order, the Delhi city authority
- put AB InBev on a “blacklist” for three years;
- sealed two of AB InBev’s warehouses in the capital city.
This means AB InBev is barred from the Delhi market and can not add fresh stocks of their beer to Delhi liquor stores of restaurants, unless it appeals against the decision.
AB InBev is the second biggest player in India’s $7 billion beer market, accounting for a 17.5% market share, according to research firm IWSR Drinks Market Analysis.
Allegations: in depth
Indian alcohol control mandates that each beer bottle sold in the city has to have a unique barcode for track and trace purposes, and to ensure there is no duty evasion.
As per the government order:
- In a random inspection at BarShala, an alcohol consumption spot in a high-end New Delhi area, on the night of August 16, 2016, city officials found 12 beer bottles of SABMiller brands at the bar that barcode records showed should have been in the company warehouse at the time.
- A follow-on investigation showed that some beer bottles sent to the bar in November had identical barcodes to those found in the inspection in August.
The bar denied any wrongdoing.
The brewer argued the discrepancy could be due to the technical errors in the barcoding system, but the city government said the company’s defence was “devoid of merit”.
The Delhi government said it was “reasonable to believe” that the same barcodes were duplicated multiple times and supplied to various retail vendors in Delhi. This amounted to the offence of selling non-duty paid liquor.
The same barcodes were supplied twice at the same restaurant and hence the discrepancy could be noticed. Had the same been supplied to a different retail outlet the discrepancy could not have been noticed easily,” stated the order as per Reuters.
Not the first time: Unethical business practices of AB InBev
AB InBev has also been charged with tax avoidance by the Indian tax authority and alleged price cartelization by the the Competition Commission of India (CCI). Both accusations are related to SABMiller and are ongoing.
AB InBev has been caught up in unethical business practices worldwide. Selected examples are:
- Trade practice violations in the EU,
- Bribery of Indian officials,
- Copying logos of other companies: First Nation Tribe and Patagonia.