Exclusive branding rights not a breach of AB-InBev/SAB merger conditions but Tribunal orders investigation into exclusive pouring rights at stadia

Exclusive branding rights not a breach of AB-InBev/SAB merger conditions

but Tribunal orders investigation into exclusive pouring rights at stadia

 

 

The Competition Tribunal has found that global beer brewer, Anheuser-Busch InBev SA/NV (AB InBev) did not breach conditions relating to its merger with SABMiller PLC (SAB) through its exclusive branding rights with outlets.  However, the Tribunal has ordered the Competition Commission to re-investigate AB InBev’s exclusive pouring arrangements related to stadia.

 

This, after local alcoholic beverages company Distell Limited (Distell) accused AB InBev of breaching the merger conditions through entering into exclusive branding agreements with outlets.

 

Distell also accused AB InBev of breaching the merger conditions through entering into exclusive agreements to supply AB InBev products at stadia events (“pouring rights”).

 

In relation to AB InBev’s exclusive branding rights with outlets, the Tribunal found that the alleged removal of competitor advertising materials from outlets by AB InBev’s representatives did not constitute a breach of the merger conditions. The alleged conduct could however be in breach of other laws.

 

In relation to AB InBev’s exclusive pouring rights at stadia, the Tribunal has found that the Commission’s decision that stadia did not fall into the definition of “outlet”, to which the merger conditions applied, was not rational.

 

Consequently, the Commission’s findings that there was no breach of the conditions has been set aside. The Commission has been ordered to re-investigate Ab InBev’s agreements which grant it exclusive pouring rights at stadia within 120 days of the Tribunal order.

 

 

Background

 

In June 2016, the Tribunal conditionally approved the multi-billion dollar merger between AB InBev and SAB. Distell had participated in the hearing at the time and made substantial submissions in relation to conditions that were ultimately imposed on the merger.

 

In November 2016, Distell laid a complaint with the Commission, alleging that AB InBev had violated the merger conditions imposed by the Tribunal. The Commission investigated the complaint and found that AB InBev’s conduct did not amount to a violation of the conditions.

 

Distell thereafter applied to the Tribunal seeking an order declaring that the conduct did amount to a breach of the merger conditions, in the alternative, to mandate the Commission to re-investigate the complaint.

 

AB InBev opposed the application, arguing that Distell’s complaint was an attempt to restrict competition and was unrelated to the merger conditions.

 

 

Exclusive pouring rights

 

In its decision the Tribunal found that “stadia” fell within the definition of “outlets” and on this basis found:

 

“… it would be in the interests of justice to provide certainty to all parties to those agreements and competitors alike as to whether AB InBev’s exclusive agreements for pouring rights at stadia amount to a breach of the merger conditions. For this reason we require the Commission to conduct a focused investigation into whether or not AB InBev’s exclusive agreements conferring it with exclusive pouring rights at stadia amount to a breach of the conditions on the understanding that the Tribunal considers stadia to fall within the definition of outlets…”

 

 

Tribunal Order

 

Having heard the arguments in the matter, the Tribunal orders as follows:

 

• The application for a declarator that AB InBev breached the conditions imposed on the merger under case number LM211Jan16 is dismissed.

 

• The Commission’s decision to not invoke proceedings established in Rule 39 of its rules based upon the complaint of Distell insofar as such addressed the issue of the agreements concluded by SAB / AB InBev with various entities regarding exclusive pouring rights at stadia, is reviewed and set aside.

 

• The Commission must investigate whether or not the agreements between AB InBev and various parties which have the effect of granting AB InBev exclusive pouring rights at stadia are in breach of the conditions on the understanding that stadia fall within the definition of outlet contemplated in the conditions. Such investigation must be completed within 120 days of the date of this order.”

 

A full copy of the Tribunal’s Order and Reasons will be made available on the Tribunal’s website at www.comptrib.co.za in due course.

 

 

Issued by:

 

Gillian de Gouveia
Communications Officer
Tel: +27 (0) 12 394 1383
Cell: +27 (0) 82 410 1195
E-Mail: GillianD@comptrib.co.za
Twitter: @comptrib

 

 

 

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