The decision by Stephen Byers, secretary of state for trade and industry, to block the merger between Interbrew and the UK business of Bass Brewers came after a 260-page report from Competition Commission and the Director General of Fair Trading both said that the merger would be "against the public interest".
Byers said he agreed with the commission and the Office of Fair Trading that the merger would "reduce competition in the market, lead to higher prices for end consumers, and reduce consumer choice".
In addition, Byers said, he had decided that Interbrew would be required to sell Bass Brewers in the UK to a buyer approved by the Director General of Fair Trading.
The Competition Commission report decided that because the merger would give Interbrew' four of the 10 top-selling beer brands in the UK, including two of the top three, Carling and Stella Artois, an effective duopoly in the industry between the two largest brewers/distributors, Interbrew and Scottish and Newcastle, would be created.
The commission said this would cause higher prices for in pubs and off licences, a concentration on leading brands leading to reduced consumer choice, and reduced competition in retail outlets, again to the detriment of consumers.
The commission said it gave careful consideration to whether the sale by Interbrew of the Whitbread Brewing Company, which it had acquired just before the Bass takeover, would "remedy the adverse effects" of the Bass acquisition, but concluded that it would "not be a sufficient remedy".
• See Byers blocks Bass / Interbrew merger
• See Micro brewers slam Interbrew decision
Byers said he agreed with the commission and the Office of Fair Trading that the merger would "reduce competition in the market, lead to higher prices for end consumers, and reduce consumer choice".
In addition, Byers said, he had decided that Interbrew would be required to sell Bass Brewers in the UK to a buyer approved by the Director General of Fair Trading.
The Competition Commission report decided that because the merger would give Interbrew' four of the 10 top-selling beer brands in the UK, including two of the top three, Carling and Stella Artois, an effective duopoly in the industry between the two largest brewers/distributors, Interbrew and Scottish and Newcastle, would be created.
The commission said this would cause higher prices for in pubs and off licences, a concentration on leading brands leading to reduced consumer choice, and reduced competition in retail outlets, again to the detriment of consumers.
The commission said it gave careful consideration to whether the sale by Interbrew of the Whitbread Brewing Company, which it had acquired just before the Bass takeover, would "remedy the adverse effects" of the Bass acquisition, but concluded that it would "not be a sufficient remedy".
• See Byers blocks Bass / Interbrew merger
• See Micro brewers slam Interbrew decision
