APB to stop supplying beer to retailers on exclusive basis

Voluntary move by Asia Pacific Breweries comes after probe by competition watchdog

Club Street and Ann Siang Hill, all decorated for a street party.
Club Street and Ann Siang Hill, all decorated for a street party.PHOTO: ASIA PACIFIC BREWERIES SINGAPORE

Asia Pacific Breweries (APB) Singapore has volunteered to stop supplying draught beer to retail outlets such as restaurants and bars on an exclusive basis, after it was investigated by the competition authority here.

In a statement yesterday, the Competition Commission of Singapore (CCS) said it had acted on complaints against the company, which operates the only large-scale brewery here.

Its spokesman told The Straits Times that three complaints were received from competing beer companies, such as microbreweries, before the start of investigations in April 2012.

APB Singapore produces beer labels such as Tiger Beer, Heineken and Guinness.

The spokesman said the CCS found it had reasonable grounds to suspect APB had "abused its dominant position by imposing outlet exclusivity to retailers who purchased any of its draught beers".

She explained that generally, exclusive arrangements by a dominant supplier dictate that a retailer buys only from it and not from its competitors.

"Such conduct may have the effect of preventing the retailer from sourcing even small quantities from a competitor, thereby cutting off any opportunities for the competitor to grow or for a new competitor to enter the market," she said.

Consumers' choices are also restricted, she added.

However, the CCS has not made any finding of an infringement and, consequently, no penalties have been imposed on APB. This is because the company volunteered to stop the practice before the end of investigations, she said.

Under competition laws here, a dominant firm is prohibited from preventing its competitors from competing effectively through exclusive business practices.

The change will apply to all draught beer contracts with retailers from Dec 28, and APB will have to provide proof of the change.

The CCS said it had stopped investigations but would continue to monitor the market.

In response to the CCS statement, Mr Mitchell Leow, head of corporate relations at APB, noted that there was no finding of liability.

"Draught exclusivity arrangements are not uncommon in the beer industry and competition among suppliers is intense," he said, noting that more than 300 beer brands are available in Singapore.

Businesses and consumers welcomed the move.

Mr Adrian Sim, the director of a restaurant and a bar and the sole distributor of a range of international beer brands, said: "It's great for consumers. I'm all for it. Retailers are in the best position to know what customers want to drink."

Other competitors also said they could try to penetrate outlets that were previously out of reach.

Like retailers, consumers welcomed the prospect of more choice.

"Maybe if I come across another beer brand, I can try it. At least I have the option," said Ms Valerie Toh, 28, an office manager.

A version of this article appeared in the print edition of The Straits Times on October 29, 2015, with the headline 'APB to stop supplying beer to retailers on exclusive basis'. Subscribe