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The owner of the Amarula brand has accused AB Inbev of breaching conditions of the 2016 merger with SABMiller.
The owner of the Amarula brand has accused AB Inbev of breaching conditions of the 2016 merger with SABMiller.

Distell and AB Inbev square off in booze showdown

LIQUOR NEWS

By Siseko Ndjobeni - Sep 13th, 10:28

Exclusive branding arrangements with liquor outlets and agreements with sports stadiums took centre stage at Competition Tribunal hearings on Thursday, into Distell's accusation that Anheuser-Busch InBev (AB InBev) is contravening the conditions of its 2016 merger with SABMiller. 

Distell, the owner of Amarula, Savanna, Hunter's Dry, wants the tribunal to compel the Competition Commission to investigate the allegations.

In terms of the conditions of the 2016 merger between the world's largest brewer AB InBev and SABMiller, the merged entity could not preclude or induce liquor outlet owners from offering space to the merged entity’s competitors.

Distell has alleged that SABMiller, which is now part of the AB InBev, had concluded the exclusive contracts, which prevented liquor outlet owners from offering advertising space to competitors.

It alleged that AB InBev offered incentives such as cash payments, refurbishments of outlets, installation of fridges and the installation of flat-screen television and audio equipment in return for exclusive promotional rights in the outlets.

In its heads of argument, Distell said agreements with stadiums in the country barred those facilities from granting competitors marketing and promotional space.

Based on the allegations, Distell said AB InBev had contravened the merger conditions.

But Competition Commission’s legal counsel Romeo Kariga told the Tribunal that the allegations did not amount to a breach of the merger conditions.

Kariga said the allegations, which he described as bold, did not trigger a need for a Commission investigation.

Distell has asked the Tribunal to review the Commission’s decision not to pursue the matter. The company’s legal representative, Greta Engelbrecht said on Thursday that tribunal should determine that there had been a breach of the merger conditions.

In papers filed to the tribunal, SABMiller dismissed Distell’s allegations as unfounded. It said the tribunal could, however, refer the matter back to the commission for investigation.

SABMiller also denied that sponsorship agreements with sports bodies, event organisers and stadium owners to market and sell its products during events amounted to a breach of the merger conditions.

Distell singled out a sponsorship agreement between SABMiller and Western Province Professional Cricket relating to matches played at Newlands Cricket Stadium in Cape Town. The agreement was concluded on December 1, 2015.

As a result of the contract, SABMiller was granted exclusive “pouring rights” at all domestic cricket matches, all international one-day cricket matches, and all international test marches. Pouring rights is exclusive permission granted to a beverage manufacturer to control beverage distribution at a venue.

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