Byers intervenes in Interbrew's £2.3bn Bass brewing takeover

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The Independent Online

The Department of Trade and Industry said yesterday it had asked the European Commission to allow it to claw back the investigation into the proposed £2.3bn acquisition of Bass's brewing unit by Interbrew of Belgium.

The Department of Trade and Industry said yesterday it had asked the European Commission to allow it to claw back the investigation into the proposed £2.3bn acquisition of Bass's brewing unit by Interbrew of Belgium.

Interbrew, the privately-held maker of Stella Artois, agreed to buy the Bass assets for £1.4bn in cash and £874m in assumed debt in June, shortly after it announced the £400m purchase of Whitbread's beer interests. Together, the acquisitions would hand the Belgian brewer about 32 per cent of the UK market, making it the country's leader.

Stephen Byers, Secretary of State for Trade and Industry, said: "The director general of fair trading [John Bridgeman] has advised that the proposed merger raises competition concerns in a distinct market in the UK which warrant further investigation. I agree and am therefore requesting the European Commission to refer the case to the UK."

The European watchdog had been due to rule on the Bass deal by 8 August. It will now take two to three weeks to consider the DTI's submission and may choose to refer all or part of the inquiry to the UK for consideration.

A Bass spokesman said the group had "noted" the application for a clawback. He stressed that the company, which had its own application to merge its brewing assets with those of Carlsberg-Tetley blocked by the DTI in 1997, structured its agreement with Interbrew so that the sale was only conditional on shareholder and EU approval and not on any decision made by UK authorities.

The spokesman would not comment on parallels, but said: "Bass has considerable experience in negotiating deals. [In drawing up the agreement with Interbrew] we did the best we could for our shareholders."

A spokesman for Interbrew, which could face major losses if the deal is blocked, said: "For the time being the matter is still with the European authorities, which must decide whether or not to grant the clawback... I can make no further comment." He was not immediately able to say why Interbrew had agreed to Bass's stipulation the deal should not be conditional on UK approval.

Ian Shackleton, an analyst at Donaldson, Lufkin and Jenrette, said: "Given the history of regulatory intervention in the beer industry in the UK, [the DTI request] must make it a more difficult hurdle for Interbrew."

Mr Byers is already considering a report by the Office of Fair Trading into whether or not the Beer Orders - rules governing the pubs and brewing industry - should be updated, abolished or left unchanged.

Hugo Powell, Interbrew's chief executive, has consistently said the group's share of the UK market could not be construed as anti-competitive as it does not own any pubs. He claims rivals control 80 per cent of other European markets, such as Heineken in Greece.

Mr Shackleton said the Commission was likely to accept the UK's request, as it did last year when Spain asked to examine Heineken's proposed takeover of Cruzcampo, which was subsequently approved.

The DTI has made eight similar requests to "repatriate" merger investigations. Only two were refused.

Bass shares closed down 17p at 690p yesterday.

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