No. ME/1024/02
A report under section 125(4) of the Fair Trading Act 1973 on the advice given on 19 February 2002 to the Secretary of State for Trade and Industry under section 76 of the Act
THE PARTIES
Adolph Coors Company (Coors) is a beer brewing company based in the US. As of 31 December 2000 its turnover was £1840m, pre tax profit was £118m, and total assets were £1134m.
Carling Brewers is the majority of what was the UK brewing business of Bass Brewers, including the Scottish element of the Bass Brewers national beer supply contracts, but excluding the remainder of the Scotland and Northern Ireland business, and the Tennants and Bass Ale brands. The gross assets being acquired are significantly in excess of the £70 million threshold; the consideration is approximately £1.2 billion.
BACKGROUND
In August 2000 Interbrew SA (Interbrew) completed the acquisition of the worldwide brewing interests of Bass PLC, following which it became the largest brewer in Great Britain. Interbrew also became the leading wholesaler and distributor of beer in Great Britain. That merger was caught by the European Community Merger Regulation but, under Article 9 of the Regulation, the European Commission referred the acquisition of the UK brewing interests acquired as part of this transaction to the UK for consideration. The acquisition of the UK brewing interests was subsequently referred to the Competition Commission (CC). The background details of the reference to the CC, its findings, and the judicial review of the remedy were contained in the Director General's advice of 8 August 2001.
On 18 September 2001 the Secretary of State for Trade and Industry announced that she had accepted the Director General's further advice regarding remedy. This was that Interbrew should be required to effect either the Carling Brewers remedy, supported by certain behavioural undertakings, or the Bass Brewers remedy. In either case the buyer of the divested business was to be subject to the Director General's consent. The Secretary of State accepted undertakings to this effect from Interbrew on 23 January 2002, and the Director General gave consent to Coors as a buyer for Carling Brewers on 24 January 2002.
ASSESSMENT AND RECOMMENDATION
The acquisition qualifies for consideration on the assets test of FTA. The parties overlap in the supply of beer in Great Britain. No conclusion has been reached on relevant product market as the increment in market share resulting from this acquisition is small on any definition. The geographic market is taken to be Great Britain, in line with the CC report on the acquisition by Interbrew SA of the UK brewing interests of Bass PLC. The merger creates a combined share of 10 to 20 per cent (increment less than 1 per cent) (see note 1) of the supply of beer in Great Britain. Coors beer is supplied to the off-trade, accounting for less than 1 per cent (see note 1) of beer supplied to the off-trade in Great Britain. However the market is defined, the increment is very small and the merger appears to be unlikely to have an adverse effect upon competition.
On these grounds we recommend that this merger is not referred to the CC.
NOTES
1. Share of supply figures have been excised and replaced by ranges at the request of the parties.
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