Irish competition fears delay £10bn sale of S&N
Apr 9 2008 by Karen Dent, The Journal
HEINEKEN’S proposed takeover of part of the Scottish & Newcastle brewing empire has run into trouble with regulators in Ireland.
Dutch group Heineken and Danish brewer Carlsberg formed a consortium in January to make a combined £10bn bid for the Newcastle Brown Ale maker.
Under the proposal, Heineken would control S&N’s business in the UK and Ireland, Finland, Portugal, Belgium and India, while its interests in France, Greece, Russia, China and Vietnam would be owned by Carlsberg.
But the Irish Competition Authority contacted the European Commission (EC) with concerns that the deal with Heineken would affect competition in the Irish beer markets.
The EC’s preliminary investigations found that consumer choice may be reduced in Ireland if the acquisition went ahead.
S&N’s Irish subsidiary, Beamish & Crawford, is an important challenger to Heineken – which sells Heineken lager and Murphy’s stout – and Guinness and Harp lager maker Diageo.
The concerns focused on the lager market, but the Irish regulator also had worries about the stout market.
The EC has now referred the issue back to the Irish Competition Authority to carry out a full investigation. Angelo Basu, an EU and competition expert at Newcastle law firm Ward Hadaway, said: “S&N is the number three brewer for lager in Ireland and they are commercially aggressive. It keeps the other two honest. It stops them raising prices too high because there is the threat that publicans and shopkeepers will switch over.
“It’s fairly common in merger cases to see that going down from three competitors to two can have a business impact. In most cases, just going from three to two will be enough to trigger an investigation. It doesn’t mean to say it won’t be cleared.”
In such cases, businesses usually bow to pressure from the regulators and agree to sell off part of their new acquisition to protect the wider deal, Mr Basu said.
“I expect that unless the Irish market is so valuable to Heineken, they may well agree to dispose of S&N in Ireland to someone else.”
