In a decision that came earlier than expected, the Australian Competition and Consumer Commission (ACCC) has stated it will not oppose Lion’s proposed purchase of Fermentum.
The ACCC had said that its findings would not be announced until next month, but released the verdict yesterday, November 4.
ACCC Commissioner, Stephen Ridgeway, said the investigation focused on whether the purchase would reduce competition in the supply of craft beer, with particular attention devoted to Fermentum’s popular Stone & Wood brand.
“The ACCC was initially concerned that the proposed acquisition would remove a large, popular independent craft brewer that has plans to expand its capacity and potentially compete more aggressively against the two major brewers in Australia, being Lion and Asahi/Carlton & United Breweries” Ridgeway said.
“However, our investigation concluded that a wide range of alternative independent craft beers will remain available in the market even if the transaction goes through.”
Another key aspect of the Commission’s inquiry was whether Lion’s own craft-styled brands competed closely with Fermentum’s expressions, in which case any acquisition could amount to a reduction in competition. In the end, the ACCC found that Fermentum’s products occupy a higher price bracket, and Lion’s existing craft brands are “generally perceived as mainstream.”
The ACCC’s investigation concluded after it deemed that customer, competitor and industry feedback did not highlight any strong competition concerns.
Ridgeway also suggested that on-premise analysis formed another keystone of the Commission’s process: “We also know from speaking to a wide range of venues, particularly those in metropolitan areas, that they typically reserve one or two taps for independent brands.”
With Lion’s acquisition, Stone & Wood would no longer have access to these taps, freeing them up for other independent brewers.
Nevertheless, Ridgeway also sounded a note of caution, advising customers who want to drink independent craft beer to perform their own research.
“Consumers that wish to purchase independent craft beer should carefully read the information provided on the label, or ask the person serving them if the beer is made by an independent brewer,” he said.
The ACCC’s decision comes on the back of a 2017 investigation into allegations that major brewers were locking independents out of beer taps through exclusivity contracts with venues. Although no action was taken on that occasion, the ACCC took the opportunity to remind the industry that they continue to closely monitor company conduct in the beer trade.