Miller says it was enticed into agreement through fraud

July 11, 2005 -- The Miller Brewing Co. was fraudulently induced to license a Canadian firm to brew Miller products in India, Miller alleges in court documents.

Miller granted the potentially lucrative licensing agreement to India Breweries Inc. only after IBI misrepresented how many of the required upgrades it had made to the breweries it planned to use for Miller products, Miller said..

Miller made the allegations in response to a lawsuit filed by IBI alleging that Miller wrongfully reneged on the licensing deal. Miller denied the allegations.

Miller said it signed on to the licensing agreement after IBI told it that required upgrades to two breweries it planned to use in India were 80% complete.

But when Miller representatives visited two months later, “the breweries were wholly inadequate for the brewing of Licensed Beer,” Miller said. “Both were lacking in equipment; both presented deplorable, unhygienic conditions."

Miller also alleged that "Most, if not all of the brewery and facility upgrades that IBI had promised Miller had been completed were not even started.”

IBI originally promised that upgrades would be done by the end of 1999, Miller said; the Canadian firm later said they would not be done until the end of 2000. IBI originally projected shipping Miller products by June 1, 2000. It later pushed that back to June 1, 2001.

IBI eventually began backing away from its promises that the breweries could be upgraded to Miller standards, according to Miller. “Instead, IBI told Miller it was ‘seriously investigating the possibility’ of upgrading yet another” brewery, Miller alleged. IBI also said it was considering, as a last resort, buying a different brewery, Miller said..

IBI eventually told Miller that it had entered into agreements allowing production at two breweries.

Miller asked to see the agreements between IBI and the breweries, according to the suit. They were never sent.

IBI did finally send technical reports to Miller, but the reports indicated the breweries lacked the equipment necessary to brew for Miller, Miller said.

A short time later, Miller notified IBI that the license agreement would not be renewed when it lapsed in December 2000, the suit says.

Miller is seeking monetary damages.

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Miller Brewing hit with huge suit
Lucrative India market at issue

April 27, 2005 -- The Miller Brewing Co. wrongfully reneged on a deal with an Toronto firm to brew beer in India, costing the Canadian company at least $500 million in profits, according to a federal court law suit filed this week.

Miller and the firm, India Breweries Inc., struck a deal in 1999, under which IBI would brew Miller beer in India, where IBI already had business relationships, the suit said.

India's beer market was growing at 10% per year at the time, according to the suit.

"Based solely on the minimum royalties specified in the Agreement, the parties expressed their expectation of sales volumes which would result in the minimum profits to IBI being in excess of $500 million," the suit said.

IBI spent millions identifying and upgrading sites to brew Miller products, but Miller rejected the the facilities IBI recommended, the suit said.

While Miller dallied, South African Breweries Ltd. announced that it would invest in India, "a market it termed one of the top growth markets in the world," according to the suit.

Miller was supposed to visit one of the potential brewing sites selected by IBI, but delayed, the suit said.

IBI proposed two newer breweries for brewing Miller products in India, but Miller rejected them because they did not use a brewing process Miller wanted, but that was illegal in India, according to the suit. Miller was well aware that the process it requested was illegal, the suit said.

Miller formally terminated its agreement with IBI in February, 2001, the suit said. In June, 2001 SAB announced that it had acquired three Indian breweries, none of which used the brewing process Miller had requested. In October, 2001, SAB announced it would invest $100 million in the Indian beer market, which SAB expected to triple in 10 years.

That fall, Miller summoned IBI representatives to the United States to void the section of their agreement requiring that good faith efforts be used to resolve disputes, the suit said.

"Shortly thereafter, discussions of a potential merger or acquisition between SAB and Miller became publicly known," the suit said. "In May of 2001, SAB and Miller formally announced SAB's acquisition of Miller."

The suit alleges Miller broke its agreement with IBI and acted in bad faith. It seeks monetary damages.