NCLAT upholds CCI's Rs 870 cr fine on Kingfisher, Carlsberg manufacturers

Throws out the appeals of the beer makers, who were accused of cartelisation in the sale and supply of the beverage in various states and UTs

The National Company Law Appellate Tribunal (NCLAT) on Friday upheld the Competition Commission of India's penalty of over Rs 870 crore on Kingfisher beer manufacturer United Breweries Ltd and Carlsberg India Pvt Ltd for cartelisation in the sale and supply of beer in various states and union territories.

“We do not find merit in either of the appeals and all the appeals are dismissed,” said an NCLAT Bench of Justice Rakesh Kumar, Member (Judicial) and Ashok Kumar Mishra, Member (Technical), while dismissing the appeals filed by the companies.

CCI, represented by Senior Advocate Manish Vashisht, submitted that in India, United Breweries (UB), Crown Beers, SABMiller, and Carlsberg are well-known companies that own famous beer brands such as Kingfisher, Budweiser, Haywards, Fosters, Tuborg, and Carlsberg. They hold about 88% share of the total volume in the domestic beer market and have huge sales and earn large profits running thousands of crores. “However, some of them are guilty of cartelisation and contravention of the provisions of the Competition Act (“Act”),” it said.

The appeal was filed against the CCI order of September 29, 2021, under which United Breweries Ltd (UBL), SABMiller India Ltd (now renamed as Anheuser Busch InBev India Ltd, after being acquired by Anheuser Busch InBev SA/NV) (AB InBev) and Carlsberg India Pvt Ltd (CIPL) were found to have been colluding with each other and using the platform of the All India Brewers’ Association (AIBA) to align the prices of beer, and seek/ implement price adjustments in several States and Union Territories of India.

The NCLAT also ruled out the involvement of the State government in the case. “The mere fact that the State levies taxes or fees on the production, sale, etc of liquor does not make the State a party to the said activities,” the order read.

Apart from the beer companies, CCI also held AIBA to be in violation of the provisions of Competition Act, of 2002.

Observing that the beer companies had filed for lower penalties before the CCI, the NCLAT noted, “On examination of the aforesaid provisions it can be inferred that the lesser penalty application is like an admission of guilt in a cartel. Once an appellant admits his/her guilt and makes a disclosure of an alleged violation of Section 3 (cartelisation) of the Act, he/she may claim a lesser penalty.”

CCI also found coordination between UBL and AB InBev with respect to the purchase of second-hand bottles. Also, four individuals each of UBL and AB InBev, six persons of CIPL and the Director General of AIBA were held guilty of anti-competitive conduct by CCI.

CCI directed UBL and CIPL to pay Rs 751.83 crore and 120.56 crore in fines and passed a cease-and-desist order.