Japan's Fair Trade Commission has raided the offices of four major breweries, including Asahi, Kirin, Sapporo, and Suntory, over allegations of price-fixing. This marks the first raid in the food and beverage sector, as the agency seeks to clarify the situation with potential criminal charges in mind. The raids come shortly after a tax integration reduced beer taxes, prompting companies to lower shipping prices and enter a new promotional competition.
According to the Nihon Keizai Shimbun (Nikkei) on October 8, the Fair Trade Commission conducted the raids on the previous day under suspicions of violating antitrust laws. The agency is authorized to conduct such raids with a court warrant under the amended antitrust law enacted in 2006. The companies are accused of coordinating the extent of price increases and the timing of price changes for beer and happoshu supplied to wholesalers over several years. Reports indicate that these prices were adjusted based on quantity per liter or by container type, such as cans and bottles. The four companies have acknowledged the investigation and stated they will fully cooperate.
There are allegations that this price coordination occurred in meetings separate from official industry gatherings. The 'Beer Brewing Association,' which includes the four companies and Orion Beer as members, holds regular monthly meetings to discuss government proposals related to beer taxes. According to Nikkei, employees at the managerial level from the four companies met separately without involving Orion Beer representatives. They reportedly discussed shipping price increases after the regular meetings or on other occasions. It has been reported that some companies relayed the discussion outcomes to higher management. The Fair Trade Commission also raided the association's office.
The four companies raised shipping prices in October 2022 and again in April of last year. On October 1, the tax rates for beer, happoshu, and third-category beer were unified at the same level, prompting the four companies to lower shipping prices for their main products. Since 2020, the tax on beer has been reduced three times, totaling 22.75 yen (approximately $0.19) per 350ml. Nikkei noted that despite retailers setting their own selling prices, the prices of the companies' flagship products have remained nearly identical. However, the mere fact that the timing or levels of price changes are similar does not prove collusion.
The Japanese beer market is effectively dominated by these four companies. According to nationwide retail sales data compiled by Nikkei POS, Asahi holds a 40.6% market share, Kirin 27.0%, Sapporo 17.1%, and Suntory 11.3%, collectively accounting for 96%. The National Tax Agency of Japan projects that beer sales in Japan will reach 1.153 trillion yen in 2024, while sales of happoshu, including third-category beer, will total 457.8 billion yen, amounting to approximately 1.6 trillion yen combined.
Despite the large market size, sales volumes are declining due to a shrinking population and a trend of reduced alcohol consumption. Estimated sales of beer products, including happoshu, have decreased by about 45% from 568.05 million cases (converted from large bottles) in 1994 to 311.92 million cases last year. Meanwhile, the prices of raw materials like malt and hops, as well as logistics costs, have risen, making profitability a common challenge for the industry. Nikkei suggests that in this environment, companies may have limited competition to avoid 'mutual destruction.'
Beer is distributed from manufacturers to wholesalers and then to supermarkets, convenience stores, and restaurants. Nikkei pointed out that if the four companies' adjustments to shipping prices affected retail prices or restaurant purchase costs, it could ultimately lead to increased consumer burdens.
Restaurants and consumers, who have endured price increases citing rising raw material costs, have expressed dissatisfaction. A 65-year-old man operating a Chinese restaurant in Minato Ward told Nikkei, "When large companies announce price increases, we have no choice but to follow suit," adding, "This raid should lead to a return to reasonable prices." A 28-year-old office worker in Toshima Ward, who has been drinking cheaper private label products since prices rose, said, "I feel cheated," and expressed hope that the companies would return to normal competition and lower prices. Conversely, a 35-year-old izakaya manager in Minato Ward remarked, "Prices have always been similar everywhere, so I thought it was normal," and stated he would not change the products he offers despite the allegations.
This incident could lead to criminal penalties and fines depending on the investigation's outcome. According to Nikkei, if the Fair Trade Commission refers the case to prosecutors, and a court finds the companies guilty, they could face fines of up to 500 million yen. Fines for collusion are typically set at 10% of the sales of the affected products during the violation period, calculated retroactively for up to ten years from the start of the investigation. Companies that voluntarily report violations may receive reduced fines, making their willingness to self-report a potential future issue.
* This article has been translated by AI.
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