Brewery sharks are beginning to circle

Friday 21 July 1995 23:02 BST
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Scottish and Newcastle has certainly got off lightly in its clash with the Office of Fair Trading, because the proposed deal to allow it to continue the takeover of Courage is largely cosmetic. If it finally resolves the issue and the bid is formally cleared, there is only one conclusion - we are into an open season for takeovers and mergers in the brewing industry.

The fact that the conditions attached to the takeover all relate to the vertical integration of brewers and their outlets - the pubs that sell the beers - confirms that the Government is unconcerned about horizontal integration between those who make the product. Consolidation is inevitable, a view that will be reinforced by the way the Department of Trade and Industry itself decided to make the OFT go back and produce the framework for a conditional clearance, when the competition authority's first inclination was a monopolies reference. This is a DTI that still believes, under Ian Lang, in Michael Heseltine's philosophy that industrial competitiveness should take priority over competition.

The absence of OFT restrictions on brand ownership as well as brewing capacity will only increase the incentive for others to move fast and consolidate their positions. The first push could come from Bass, and its victims are likely to be among smaller competitors with the strongest brands, especially those with a degree of national recognition. That means respected names such as Greene King, the East Anglian brewer, and perhaps also Marston, must already be under scrutiny.

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