Horsetrading starts in Bass/Interbrew debacle
Serious horsetrading over brands and breweries is now set to take place between Interbrew and the government to try to find a solution acceptable to both sides in the Bass Brewers mess.
The government's decision in January to force Interbrew of Belgium to dispose of Bass Brewers was formally quashed by a High Court judge last Friday. The judge ordered the Secretary of State for Trade and Industry, Stephen Byers, to open a new review into the deal.
However, the court did not set a timetable for ending the uncertainty, and until Byers determines what Interbrew has to sell to satisfy government concerns, the future shape of the British beer market will remain unclear.
On Friday Judge Alan Moses told the Department of Trade and Industry and the Competition Commission they would have to pay 75% of Interbrew's legal costs, which could be up to £500,000.
Interbrew paid £400m to buy Whitbread's brewing arm last spring, and a few weeks later paid £2.3bn to Bass for its breweries. The two deals gave it around 32% of the British beer market.
The judge upheld the commission's conclusion that Interbrew's purchase of Bass Brewers would harm competition. However, he said, the commission had acted unfairly because the Belgian firm had not been given a chance to give evidence on an alternative remedy, disposing of Whitbread's breweries rather than Bass's.
In a second kick at the commission, the judge ruled on Friday that it should now be John Vickers, the Director-General of Fair Trading, who must give Byers advice on an appropriate remedy for the competition problems caused by Interbrew's ownership of both Bass Brewers and the Whitbread breweries.
Having been given a second chance, Interbrew is now expected to offer Vickers a package of disposals of brands and breweries that will satisfy him the Belgian brewer will not dominate the UK's beer market in a duopoly with Scottish & Newcastle.
One of the main complaints has been that Interbrew has ended up with two of the UK's biggest lager brands, Carling, from Bass, and Stella Artois, which is owned by the Belgian brewer and brewed under licence in Britain by Whitbread. The Competition Commission ruled that Interbrew could not solve competition worries in the UK by selling Whitbread because, as the owner of the Stella brand, it could still put pressure on an independently-owned Whitbread. However, it appears not to have considered alternatives such as letting Interbrew/Bass Brewers keep Stella and giving an independent Whitbread another big brand in exchange.
The Department of Trade and Industry said on Friday that the secretary of state would ask Vickers to "obtain further representations" from Interbrew.
Phillip Vaughan, a litigation partner at Simmons & Simmons, which is advising Interbrew, said the company would now be able to achieve a negotiated solution: "Interbrew now knows what the problems are and will propose a solution."
One leading competition lawyer said: "Mr Byers is now free to make a fresh decision unfettered in any way by what's gone before. Interbrew can come back with the arguments they don't feel they were allowed to make before."
Serious horsetrading over brands and breweries is now set to take place between Interbrew and the government to try to find a solution acceptable to both sides in the Bass Brewers mess.
The government's decision in January to force Interbrew of Belgium to dispose of Bass Brewers was formally quashed by a High Court judge last Friday. The judge ordered the Secretary of State for Trade and Industry, Stephen Byers, to open a new review into the deal.
However, the court did not set a timetable for ending the uncertainty, and until Byers determines what Interbrew has to sell to satisfy government concerns, the future shape of the British beer market will remain unclear.
On Friday Judge Alan Moses told the Department of Trade and Industry and the Competition Commission they would have to pay 75% of Interbrew's legal costs, which could be up to £500,000.
Interbrew paid £400m to buy Whitbread's brewing arm last spring, and a few weeks later paid £2.3bn to Bass for its breweries. The two deals gave it around 32% of the British beer market.
The judge upheld the commission's conclusion that Interbrew's purchase of Bass Brewers would harm competition. However, he said, the commission had acted unfairly because the Belgian firm had not been given a chance to give evidence on an alternative remedy, disposing of Whitbread's breweries rather than Bass's.
In a second kick at the commission, the judge ruled on Friday that it should now be John Vickers, the Director-General of Fair Trading, who must give Byers advice on an appropriate remedy for the competition problems caused by Interbrew's ownership of both Bass Brewers and the Whitbread breweries.
Having been given a second chance, Interbrew is now expected to offer Vickers a package of disposals of brands and breweries that will satisfy him the Belgian brewer will not dominate the UK's beer market in a duopoly with Scottish & Newcastle.
One of the main complaints has been that Interbrew has ended up with two of the UK's biggest lager brands, Carling, from Bass, and Stella Artois, which is owned by the Belgian brewer and brewed under licence in Britain by Whitbread. The Competition Commission ruled that Interbrew could not solve competition worries in the UK by selling Whitbread because, as the owner of the Stella brand, it could still put pressure on an independently-owned Whitbread. However, it appears not to have considered alternatives such as letting Interbrew/Bass Brewers keep Stella and giving an independent Whitbread another big brand in exchange.
The Department of Trade and Industry said on Friday that the secretary of state would ask Vickers to "obtain further representations" from Interbrew.
Phillip Vaughan, a litigation partner at Simmons & Simmons, which is advising Interbrew, said the company would now be able to achieve a negotiated solution: "Interbrew now knows what the problems are and will propose a solution."
One leading competition lawyer said: "Mr Byers is now free to make a fresh decision unfettered in any way by what's gone before. Interbrew can come back with the arguments they don't feel they were allowed to make before."
