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A Division Bench of the Supreme Court of India comprising Justice Vikram Nath and Justice Dipankar Datta on Friday admitted an appeal filed by United Breweries (UB) against NCLAT ruling issued in December last year upholding ₹750 crore penalty imposed by CCI on the company for cartelisation.
The Bench issued notice to the Competition Commission of India (CCI) and also stayed the recovery of penalty, subject to a further deposit of 10 per cent of the penalty imposed by CCI within six weeks. UB had already deposited 10 per cent of the penalty amount pursuant to NCLAT directions.
CCI had, in 2021, passed a final order imposing a penalty of ₹870 crore upon beer companies viz. United Breweries (₹750 crore) and Carlsberg (₹120 crore) for cartelisation.
Subsequently, UB preferred appeal before NCLAT which upheld CCI order in December 2022 imposing a penalty upon the beer company.
“We do not find merit in either of the appeals and all the appeals are dismissed,” noted NCLAT Bench comprising Justice Rakesh Kumar, Member (Judicial) and Ashok Kumar Mishra, Member (Technical), in its 81-page ruling while dismissing the appeals filed by the companies and their individuals.
Cartelisation by beer companies
In September 2021, CCI passed a final order against three beer companies namely UB, SABMiller (now, AB InBev) and Carlsberg for indulging in cartelisation in sale and supply of beer in various States and Union Territories, including through the platform of All India Brewers’ Association (AIBA).
Also read: United Breweries’ MD & CEO Rishi Pardal resigns
As AIBA was found to be actively involved in facilitating such cartelisation, CCI also held AIBA to be in contravention of the provisions of Competition Act, 2002 apart from the beer companies. All the three beer companies were lesser penalty applicants before CCI.
Based on evidences of regular communications between the parties collected by the DG during search and seizure, and on the basis of the disclosures made in the lesser penalty applications, CCI found that the three companies engaged in price co-ordination in contravention of the provisions of Section 3(3)(a) of the Competition Act, 2002 and in collectively restricting supply of beer in Maharashtra, Odisha and West Bengal in contravention of the provisions of Section 3(3)(b) of the Act, and in sharing of market.
CCI also found co-ordination between UB and AB InBev with respect to purchase of second-hand bottles. Further, 4 individuals of UB, 4 individuals of AB InBev, 6 individuals of Carlsberg and the Director General of AIBA, were held by CCI to be liable for the anti-competitive conduct of their respective companies/ association, in terms of Section 48 of the Act.
Lesser penalty
Giving benefit of reduction in penalty under the provisions of Section 46 of the Act of 100 per cent to AB InBev and itsindividuals, 40 per cent to UB and its individuals and 20 per cent to Carlsberg and its individuals, CCI directed UB and Carlsberg to pay penalties to the tune of ₹750 crore and ₹ 120 crore, respectively, besides passing a cease-and-desist order.
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