Coca-Cola Amatil - proposed acquisition of Foster's Non-Alcoholic Beverage Assets

Summary

The ACCC has decided not to oppose the proposed acquisition by Coca-Cola Amatil Pty Ltd of the non-alcoholic beverages business of Foster's Group Limited.

Market definition

The ACCC considered the proposed acquisition in the context of the following relevant markets:

a) the national market for the production and wholesale supply of carbonated soft drinks (CSDs);
b) the national market for the production and wholesale supply of bottled water;
c) the national market for the production and wholesale supply of fruit beverages; and
d) the national market for the production and wholesale supply of cordial.

The ACCC considered the carbonated fruit beverages category did not constitute a separate market. Rather, it was a small portion (around 6 per cent of sales) of the fruit beverages market.

Competition analysis

The ACCC considered that the proposed acquisition was unlikely to result in a substantial lessening of competition in any relevant market for the following reasons:

a) in all the relevant markets, CCA was not significantly increasing its market share, as FGL's share in each market was less than 2 per cent, both in the grocery and non-grocery channels;
b) although CCA was increasing its share in the carbonated fruit beverages category, this did not lead to a significant change in market shares in the fruit beverages market; and
c) the proposed acquisition was unlikely to significantly increase the incentive and ability of CCA to leverage its market power (in particular in CSDs) across complementary products, through a foreclosure strategy, because:
- the acquired brands had a small presence in non-alcoholic beverages as a whole, and in each relevant market, both in the grocery and non-grocery channels;
- CCA was not acquiring additional production or distribution infrastructure, or significantly increasing its refrigeration capacity; and
- CCA would continue to be constrained by relevant brands of different competitors, including rivals with a range of products that would compete with CCA's increased portfolio.