In Contracts by Clyde Mooney

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After an extensive investigation in a rapidly changing marketplace, the consumer watchdog has ruled the contracts pushed by big brewers are not having a significant impact on craft beer and brewers.

A number of smaller brewery operations put allegations to the ACCC (Australian Competition & Consumer Commission) that major brewers were locking them out of venues through contracts mandating exclusivity or volume requirements the smaller operations could not meet.

Over the past three years the ACCC has investigated, examining the contracts and practises of 36 venues across NSW and Victoria, as well as 30 contracts supplied by small brewers and 140 from Lion and Carlton & United Breweries (CUB).

The Commission concluded the “impact is unlikely to substantially lessen competition in any of the markets we investigated”.

Unlike the tied pubs of decades ago, the enquiries centred around today’s contracts by Lion and CUB requiring typically 80 per cent of available taps. These agreements also typically include rebates, infrastructure investment and even credit for refurbishment.

The venues examined were in Sydney and Melbourne metro and suburban precincts, and assorted regional areas of both NSW and Victoria, focussing on 36 with demand for craft beer. Venues purchasing draught outside of a contract were not considered.

ACCC deputy chair Dr Michael Schaper says they found that publicans’ choice for their patrons was the strongest deciding factor, not prohibitive contracts.

“Although some venues had exclusivity arrangements, most pubs and clubs said they did not feel constrained from allocating taps to smaller brewers and could make taps available for craft beer if necessary.

“While some craft brewers may have been refused access to taps by certain venues, our investigation found that the venues were responding to consumer demand for certain beer brands, rather than restrictions imposed by the big brewers. In fact, over half of the venues contacted by the ACCC indicated that customer preference was the key factor in determining the brands, types of beer and number of craft beers offered by the venue.”

AHA CEO Stephen Ferguson thinks the ACCC’s decision “reasonable” and that ultimately the customer decides.

“The message that comes through loud and clear is that hotels put on products that their customers want.

“If there’s a good product available in the local area, they know the local people will want it and put it on, but it’s relevant to where you are. If you’re in inner-Sydney, with 17 nearby micro-breweries, obviously there’s a high demand there. But that might be less so at Dubbo.”

Ferguson also says the support and additional services should not be under-valued, making a big difference in a lot of operations.

“That’s where publicans get their value, and probably the big fellas have more scope to provide those services than a small company that’s just taking one tap.”

Defending his inner-Sydney electorate and its rapidly growing dominion of boutique breweries, Shadow Minister for Cities and Tourism Anthony Albanese suggested parliament should at least bring an adjustment to the tax regime, which he says puts a “significant burden” on smaller operations.

The greater levy on kegs smaller than 50 litres means that lower volume operations using smaller kegs see a slightly higher price per litre, potentially influencing buying decisions. Albanese is petitioning government to change the tax rates to be the same on the different sizes of kegs.

The ATO says from 1 February, for beer over 3.5 per cent ABV, the tariff on a container (keg) up to and including 48 litres is $48.57, where the tariff on a container over 48 litres is $34.21 – 30 per cent and 29 cents per litre less.

The competition watchdog says it will continue to closely monitor conduct and developments in the market.