Lion said it "can confirm it has co-operated fully with the ACCC in relation to its inquiries into the Australian draught beer market. However, it will be inappropriate for us to make further comment at this time." ACCC chairman Rod Sims confirmed that the investigation into the wholesale supply of beer to pubs was continuing and "that it is a priority matter for us". He said he couldn't go into detail, except that "we are in contact with many hotels and event organisers". Mr Sims is expected to unveil the commission's top priorities for 2015 at a speech to the Committee for Economic Development of Australia in Sydney on Friday. The ACCC has 100 active investigations but beer is believed to be one of the regulator's top 10 priorities. Complex investigation Mr Sims has previously said misuse of market power, including the lessening of competition, "strikes at the heart of companies and business systems".

Last year he took Pfizer Australia to court alleging misuse of market power and exclusive dealing in relation to the supply of a particular product to pharmacies. He also took aim at supermarket giant Coles and the misuse of its market power in relation to the treatment of 220 suppliers. In this case the ACCC alleged unconscionable conduct, which Coles settled in December, agreeing to pay a $10 million fine, enter an enforceable undertaking with the ACCC and set up a formal review process for up to 220 suppliers with combined sales of $660 million. If the ACCC can build a case that such exclusive dealing in the brewing industry results in a substantial lessening of competition, the legal axe will fall on the big brewers. But it will be a complex and time-consuming investigation given the size of the ACCC's budget and the multifaceted market. For starters, there are numerous exclusive contracts across retail and hospitality. The most notable examples are coffee shops, which enter contracts to sell particular brands in return for various inducements including rebates and machines, and fast food chains which enter deals to sell exclusive soft drinks.

Without regulatory intervention, the big two multinational brewers will keep targeting small brewers and kill off craft brewing in this country. Thunder Road Brewing Company The ACCC will need to determine the market. Not all pubs sign contracts and some craft brewers don't have their own breweries, so the issue of supply has been a problem for some of the smaller ones. It will also need to determine the dominant players and whether competition is being harmed. It must then look at whether these contracts are constraining growth in the craft beer market by stifling competition. 'Drinkers want choice' The ACCC has already amassed a pile of information, including emails and contracts, after writing to brewers and publicans last year outlining a listed of very pointed questions.

"Does your company have an exclusive distribution arrangement with any customers for the supply of draught beer? If so identify those customers," it asked, as well as questions such as "Does your business face difficulties in negotiating supply of draught beer?" On February 11, consumer advocacy group Choice issued a statement saying it had completed its own investigation into Lion and CUB and concluded they are "locking out genuine Aussie craft beers from the taps at your favourite local pub". Choice based its findings on a contract, still in force, for the supply of tap beer, which demanded exclusive access for Foster's Group (now called CUB). Clauses include the beer giant as the exclusive supplier of all light-strength beer, all low-carbohydrate draught beers, all domestic premium and sub-premium draught beers, all imported draught beers, all specialty and craft draught beers and all draught spirits and cider. A CUB spokesman said it wasn't unusual for publicans to enter into contracts for the provision of beer, spirits and wine, adding that it was a long-standing practice. In relation to beer, he said many of the contracts included discounts on the keg price and investment in the pub such as cool rooms, tap lines and fridges and so on. "Drinkers want choice, so while 30 per cent of our venues are under contract, we're increasingly finding they are not just exclusive to CUB," he said.

Interestingly, under the US Federal Alcohol Administration Act it is unlawful to have exclusive contracts in a venue contracted to a brewery. The US act also includes a commercial bribery clause which bans any inducements if the direct effect is to "prevent, deter, hinder or restrict other persons from selling or offering for sale" any distilled spirits, wine, or malt beverages "in interstate or foreign commerce by commercial bribery or by offering or giving any bonus, premium or compensation to any … representative of the trade buyer". Small brewers cry craftwashing Craft beer represents 2 per cent of the Australian beer market, according to research house IBISWorld, but it is a high-stakes game for the big brewers as consumers turn away from mainstream beer and move towards craft beer. To put it into perspective, the latest data from the Australian Bureau of Statistics show that beer consumption is at its lowest level in 67 years, falling more than half its peak of the mid-1970s. In contrast, craft beer might only represent 2 per cent of the overall beer market, but it is growing at more than 10 per cent a year. The number of craft breweries has more than doubled in the past decade to more than 175.

The heat is most certainly on. Last year the ACCC went in hard on CUB, fining it more than $20,000 for misleading labelling on its Byron Bay Pale Lager, which suggested the beer was brewed by a small craft brewer in Byron Bay when it was brewed hundreds of kilometres away by CUB. The company also entered a court-enforceable undertaking with the ACCC, with Mr Sims sending a strong message about his thinking in this area: "Many small brewers cater to consumers who prefer to support small, niche businesses. "When large companies portray themselves as small businesses, it undermines the unique selling point that such small businesses depend upon, and it misleads consumers." Lion heard the message and decided to put its name on all its Australian manufactured beers to make it clear for consumers it is the ultimate owner of the brand. It started with its James Squire labels and will roll it out across the portfolio over the next year. But it is not enough to appease the independent craft brewers who want the ACCC to turn up the heat, before it is too late.

Melbourne craft brewer Thunder Road Brewing Company said in a statement it believed the big brewers were targeting craft brewers to even worse effect in the past year. "In our view, without regulatory intervention, the big two multinational brewers will keep targeting small brewers and kill off craft brewing in this country. Their approach seems to be 'buy the competition or buy the taps'." With Coca-Cola Amatil, the supermarkets and others moving into the craft beer space, the issues will only get bigger.