Regulator blocks Asahi's soft drink plans in Australia

By Guy Montague-Jones

- Last updated on GMT

Related tags: Coca-cola, Soft drink

Asahi’s proposed acquisition of P&N Beverages has met with opposition from Australian regulators, which are eager to maintain competition in the country’s highly concentrated soft drink market.

Japanese beverage giant Asahi has already bought Schweppes Australia from Cadbury and is looking to deepen its presence in the Australian market.

But the Australian Competition and Consumer Commission (ACCC) has blocked its latest plans. The regulator ruled this week that the proposed AUS$364m (€255m) takeover of P&N would be a step too far.

The basis for the regulatory opposition is that the deal would leave only two big players in the market; Asahi and Coca-Cola Amatil. The former already has a one fifth market share and the latter has a share that is edging towards three quarters.

Competition concerns

ACCC is particularly concerned that P&N joining Asahi would leave little competitive pressure at the lower end of the market for carbonated soft drinks (CSDs), allowing Asahi to increase prices.

The regulator said: “Since Asahi will face little competition from other suppliers in relation to the lower priced value CSDs, Asahi would have the ability and incentive to increase the price of P&N’s branded and private label CSDs post acquisition.

“The proposed acquisition would weaken the constraint provided on the Schweppes range of CSDs, allowing Asahi to also increase the price of its Schweppes range of CSDs.”

According to the Financial Times, Asahi has not given up on the P&N acquisition and plans to consider what it can do to win the approval of ACCC.

Asahi is looking to expand into foreign markets and reduce its reliance on the declining Japanese market. It has set the goal of increasing the overseas share of total sales to between 20 and 30 per cent by 2015.

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