Leadership3 publishersIndependently confirmed2 min readPublished
Japan's competition regulator raids beer makers over price rises they all blamed on costs
Japan's Fair Trade Commission has searched Asahi, Kirin and Suntory over suspected collusion on price rises each brewer had blamed on rising costs. For companies that raise prices in step with rivals, a shared cost explanation did not keep investigators out.
The Board Room · Leadership desk
Drafted by a language model from the sources cited here and checked against its claim ledger before publication. How we use AISend a correction
What happened
- Sapporo Breweries was also reportedly searched, and the BBC said it had contacted the firm for comment.
- According to the Japan Times, the investigation centres on price increases the companies made in October 2022 and in April last year.
- Shares in Asahi, Kirin and Sapporo fell after news of the investigation broke on Wednesday; Suntory is not publicly listed.
- Kirin said the impact on its financial results had not been determined and that it would promptly disclose any material developments.
Compiled by The Board RoomSomething wrong?How this is made
Why it matters
- exposure Any company whose price rise lands alongside rivals' and cites the same input costs is where these brewers stood before the searches. Its public rationale leaves open whether the decision was its own.
- cost Investors in the listed brewers are pricing a liability Kirin says it has not yet determined, on a timetable the commission controls.
- constraint A pricing decision taken this quarter can be examined years afterwards, so the internal record of how it was reached has to hold up long after the announcement.
The leadership question starts with the brewers' own explanation. Each announced its increases citing the rising cost of raw materials, along with energy and transportation [6]. The allegation is that the companies worked together to raise prices [1]. A cost explanation can account for the rise without showing that each company set its price alone. Kirin said its brewing subsidiary, Kirin Brewery Company, was searched "on suspicion of a violation of the Antimonopoly Act" [7].
The commission had not commented when the BBC reported the searches [11], so it has not said what prompted them or how much weight it gives a shared rationale. I think the exposure comes from moving in step with competitors, and the cost language is the part of that move outsiders can see. The record shows the same stated reasons from all four companies [6].
Suntory's wording covers more than beer. A spokesperson confirmed "an on-site inspection" had taken place "in connection with a potential violation of Japan's Antimonopoly Act relating to domestic alcohol trade practices" [9]. Asahi said it was "subject to investigation by the Japan Fair Trade Commission regarding a suspected violation of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade" [10].
The brewers' case, as they made it at the time, was that their input bills had gone up [6]. That may still be how this ends, because so far the commission has only carried out searches and made no finding. Asahi, Kirin and Suntory each said they would cooperate fully [2], and Kirin said it takes the matter "very seriously" [12]. Suntory also apologised: "We sincerely apologise for any concern or inconvenience this situation may cause to our customers, business partners, and other stakeholders." [13]
A company raising prices this quarter has two ways to explain the increase, and the choice is a trade-off. The industry-wide account is the one competitors will also give, as all four brewers did [6]. A company-specific account of its own costs, and of when and how it decided, takes more work to put together. In my view it is also easier to tell apart from a coordinated line.
What to watch
- Any order or finding from the Japan Fair Trade Commission, and whether it treats the brewers' shared cost announcements as part of its evidence.
- Whether Sapporo Breweries confirms the reported search.
- Whether the inquiry extends past beer into the wider 'domestic alcohol trade practices' named in Suntory's statement.