Concern grows that S&N will escape takeover investigation Whitbread's fears mount that S&N will escape bid probe

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The Independent Online
A big row is developing in the brewing industry over reports that the Office of Fair Trading will not recommend a monopolies investigation into the pounds 435m take-over bid launched last month by Scottish & Newcastle Breweries for Courage

The OFT said yesterday that it hoped to next week send the results of its findings about S&N's acquisition to Michael Heseltine, President of the Board of Trade, who has the ultimate say on whether take-over deals should be referred.

Sir Michael Angus, chairman of Whitbread, yesterday openly challenged the Government to clarify its competition policy by calling for the Monopolies and Mergers Commission to investigate the take-over of Courage. Whitbread also tried to buy Courage but, according to sources, was fully prepared to face a MMC probe and possibly have to agree to some restrictive conditions before gaining clearance.

His strong comments about the S&N situation were made at Whitbread's annual meeting for shareholders in London.

Failure to investigate, he warned, would lead to an acquisitive stampede by other brewers to close the gap with S&N which would leapfrog Bass as the industry's market leader if its take-over went through undiluted.

The heads of the leading brewing companies, Whitbread included, accept that concentration at the top of the industry is inevitable given the changing market conditions. However, Sir Michael and Sir Ian Prosser, chairman and chief executive of Bass, claim that S&N would control more than 31 per cent of the beer market - a clear breach of the Monopoly benchmark of 25 per cent.

Sir Michael, a former President of the Confederation of British Industry, said yesterday: "Whichever way the market share of the merged company is calculated, there is no doubt that it would lead to the biggest ever concentration in UK brewing.

"In all recent, and much smaller, examples of brewery mergers the competition authorities have referred them for investigation and without exception they have been found to be against the public interest."

He then reminded the 500-plus shareholders at the meeting of what happened in 1989 when S&N was on the wrong end of a bid from Elders, the Australian group and then owners of Courage. "Permission to proceed was denied. Nothing fundamental has changed since that time and an MMC referral must be appropriate course of action. Failure to do so wouldamount to a rewriting of the rules while the game is still in progress and might well be open to challenge in the courts."