Competition Commission takes a look at AB InBev sports deals

01 March 2020 - 00:00 By SHAIN GERMANER

Anheuser-Busch InBev (AB InBev) is to be investigated by the Competition Commission for allegedly dominating fridge space at events and securing exclusive deals with sports stadiums, which competitor Distell claims is anti-competitive.Last week the Competition Tribunal ordered the commission to investigate Distell's allegations that AB InBev had failed to adhere to the conditions of its 2016 acquisition of SABMiller that stipulated there would be space for local products in its fridges in retailers for a specific period. Distell spokesperson Dennis Matsane said the company welcomed the tribunal's decision. Distell has been trying for more than three years to get the alleged breaches investigated.The 2016 deal approved by the tribunal said the merged company would not prevent any outlets from offering refrigerator space to third parties (such as Distell) unless it was at an event sponsored by AB InBev. "[AB InBev] shall ensure that outlets [that] are solely supplied by it with beverage coolers or refrigerators are free for a period of five years to provide at least 10% capacity of one such beverage cooler or refrigerator in such outlets to South African-owned and -produced cider brands and competing third parties," reads the competition authority's approval of the deal.In December 2016 Distell first approached the Competition Commission claiming the agreement had been breached, as AB InBev had allegedly insisted that certain outlets not offer space for Distell products.Presiding member Yasmin Carrim, who took the lead on the panel at the tribunal that heard the complaint, said in her ruling last week: "This allegation related primarily to promotional and pricing materials in outlet-owned spaces in both fully branded and non-fully branded outlets. " Distell also alleges that AB InBev induced organisers of events to limit competitor presence. Events mentioned in Carrim's ruling where this supposedly happened included a Spring Day festival in Pretoria and the Waterkloof Air Show, also in the city.Distell said AB InBev had also entered into a range of agreements for "exclusive pouring rights" at events at stadiums across the country - including an agreement between the Western Cape Cricket Board in relation to the Newlands stadium in Cape Town.In its written responses to the commission, AB InBev said the original merger agreement did not mention anything about branding being available at any events, and the company was therefore within its right to remove Distell's branding.AB InBev also said stadiums do not count as "outlets" in terms of the conditions of the 2016 deal.The commission sided with AB InBev, saying in March 2018 that the company had not contravened the conditions. However, it said the argument surrounding the stadiums was still under investigation by the commission's market conduct division. Following the defeat of its application to the commission, Distell approached the Competition Tribunal, asking it to declare that AB InBev's conduct amounted to a breach of the conditions, and to set aside the commission's decision.In her ruling, Carrim acknowledged that Distell's application had been altered since it approached the commission, and was now focusing on the alleged exclusive trade deals AB InBev had with stadiums over products and exclusive branding agreements.The tribunal concurred with the commission's view that the agreement does not apply to branding and promotional materials. "This of course does not mean that the conduct of AB InBev is harmless and does not warrant further investigation - either under the provisions of the Competition Act or in terms of criminal law - but that is not a matter that falls within the ambit of this application," says Carrim's judgment.However, regarding AB InBev's arguments that stadiums should not be considered outlets, the tribunal was unconvinced, and said the commission failed to properly investigate this definition. The tribunal ordered that the definition of the term "outlet" be a key focus in its upcoming investigation, which must be completed within the next four months."The commission's election to not pursue [the outlet complaint] was based on the determination that stadia were not included in the definition of outlets. Given our assessment above, namely that the commission failed to apply its mind, this finding is thus irrational. We therefore review and set aside this decision," it says.In a written response, AB InBev and South African Breweries say: "The South African Breweries is pleased that the Competition Tribunal has found in its favour regarding a complaint brought forward by Distell . "We acknowledge that the Tribunal has instructed the Competition Commission to conduct a further investigation in the next 120 days on our various sponsorship agreements involving stadia around South Africa, and we will work with the Commission in this regard. "SAB has for many years prior to the merger in 2016 been a proud sponsor of our sporting codes and stadia, and we are confident that this further investigation will again show that SAB's agreements are not in breach of the merger conditions."..

There’s never been a more important time to support independent media.

From World War 1 to present-day cosmopolitan South Africa and beyond, the Sunday Times has been a pillar in covering the stories that matter to you.

For just R80 you can become a premium member (digital access) and support a publication that has played an important political and social role in South Africa for over a century of Sundays. You can cancel anytime.

Already subscribed? Sign in below.



Questions or problems? Email helpdesk@timeslive.co.za or call 0860 52 52 00.