Indian AB InBev Offices Raided in Price-Fixing Investigation, Huge Fines Possible
Drink News AB InBev
Three of India’s top beer companies saw their offices raided by the company’s antitrust watchdog agency on Thursday, in a large-scale reveal of a yearlong investigation. India’s United Breweries, Denmark’s Carlsberg, and the world’s largest brewer, Belgium’s Anheuser-Busch InBev (AB InBev) all saw search-and-seizure operations unfold in their offices, as investigators searched for evidence in a nationwide antitrust investigation. The companies stand accused for price-fixing in Indian markets, according to Reuters. Executives at each of the brewers’ Indian operations are now being questioned.
The Competition Commission of India (CCI) is the agency in charge of such investigations, and was apparently tipped off by a whistle-blowing employee of one of the three companies, who reached out to the CCI via “leniency application,” revealing details about the alleged price fixing happening at their company. The program exists for exactly such a use. An unnamed government source, meanwhile, apparently told Reuters that damning evidence had been uncovered, in the form of “email exchanges showing that the companies were fixing prices.”
“That is smoking gun evidence,” says the source in the Reuters piece.
The beer companies, meanwhile, declined to comment, with AB InBev’s Indian spokesperson saying “It would not be appropriate for us to comment at this time.” He then went on to say the following, however: “We take antitrust compliance very seriously. Integrity and ethics are part of our core values, embodied in our company culture. Our Code of Business Conduct makes clear that our employees must understand and comply with all applicable competition laws.”
Hate to break it to you, but it sounds like this was the opposite of what was going on in India, possibly at all three of the companies. United Breweries is the brewer behind India’s macro beer brand Kingfisher, while Carlsberg of course sells beer under its own label. They all could be facing prodigious fines as a result of this investigation, especially if the alleged price fixing matches the definition of forming a cartel under India’s Competition Act.
Under India’s Competition Act, the formation of a cartel is a “pernicious” offence and the CCI has the power to impose fines up to three times the profit made in each year concerned or 10 percent of annual revenue, whichever is higher.
Suffice to say, “three times the profit made in each year concerned,” or “10 percent of annual revenue,” would both be sky-high figures that would make the amount AB InBev has been fined in the U.S. for pay-to-play scandals look like absolute peanuts in comparison. We’ll stick with this story as it develops, but it could end up costing the world’s biggest brewer a big chunk of change.