As Movendi International reported in October 2019, the Competition Commission of India (CCI) raided the offices of Carlsberg, AB InBev acquired SABMiller and India’s United Breweries (UB) in 2018 after AB InBev played whistleblower saying they detected a price cartel in SABMiller after acquisition. This led to an antitrust investigation conducted by the CCI.
Playing whistleblower as AB InBev did under the “leniency programme” can reduce penalties dealt out by the CCI. Later on Carlsberg and UB also filed for leniency, too.
“We should avoid getting caught”
According to Reuters, the investigation report has revealed that the three brewers exchanged commercially sensitive information and colluded to fix beer prices in India over a period of 11 years. Senior CCI members will consider the report as they decide on fines which could exceed $250 million.
This collusion to fix prices is a violation of the Indian competition law. A total of 19 executives of the alcohol companies were found to have violated the law.
Key findings from the investigation
- Executives’ conversations, WhatsApp messages and e-mails show the three alcohol giants regularly and collectively strategized in seeking price increases in “several states”, forging a cartel which gave them more bargaining power.
- The beer companies had held talks at least three times between 2015 and 2018 to create artificial scarcity and pressure governments on policy changes.
- The three brewers used the All India Brewers Association (AIBA) as a common platform to decide collectively on prices. Then the AIBA lobbied governments on price increases on behalf of the brewers.
- “We should avoid getting caught,” AIBA’s director general wrote in an e-mail in 2016 to executives of the three companies. This shows the brewers were aware they were violating Indian competition law.
- The collusion has been conducted through the highest level of management including managing directors, vice presidents, and sales and marketing heads.
- Examples of the evidence provided in the report include:
- In 2013, the chief sales officer of UB, Kiran Kumar, and then-managing director of SABMiller, Shalabh Seth, exchanged WhatsApp messages to plan a INR60 price increase per case of beer in a particular state.
- Artificial scarcity created by the brewers in the state of Odisha in 2015 after a pricing policy change.
- Artificial scarcity created by the brewers in the state of Maharashtra in 2017 after a tax hike.
WHO in dialogue with corrupt companies
On paper these dialogues with Big Alcohol corporations aim to discuss “how they best can contribute to the reduction of alcohol-related harm in their role as developers, producers, marketers and sellers of alcoholic beverages” with a particular focus on the following technical areas:
- self-regulation of alcohol beverage marketing;
- practices of retail sales and serving;
- production and packaging;
- labelling and consumer information; and
- data on sales and consumption.
The futility of these “dialogue” meetings is – once again – revealed by the alcohol industry’s conduct. The revelations of price fixing schemes over more than a decade illustrates that Big Alcohol does not engage in the dialogue about “practices of retail sales and serving” in good faith. To the contrary, they arrange prices illegally in order to boost profits as well as to undermine and derail alcohol policy systems.
That the World Health Organization convenes so called dialogues with the alcohol industry is farcical,” says Kristina Sperkova, International President, Movendi International.
Taking the technical areas at face value would mean that the participants of these dialogues would make real, serious efforts to conduct themselves in such a way that helps reduce alcohol harm, not fuel it.
But what this latest case of unethical business practices of Big Alcohol in India shows is that these alcohol giants have no problems sitting down with WHO, discussing these issues, while their business conduct keeps undermining any meaningful progress of these technical areas.
The WHO should pull away the fig leaf and end this farce.”Kristina Sperkova, International President, Movendi International
Read more about Big Alcohol’s unethical business practices in India
Indian Tax Authorities Accuse AB InBev of Tax Avoidance
Corporate Fraud: Carlsberg Bribed Indian Officials
Just Drinks: “Brewers silent on India price-fixing report“