The Office of Fair Trading has proposed a compromise solution to the lengthy dispute surrounding the acquisition by Belgium's Interbrew of Bass Brewers. The proposals could allow the Belgian brewer to keep at least part of Bass.
In a consultation paper published yesterday, the OFT set out four possible remedies. For the first time it suggested that Interbrew's disposal of the Carling lager brand could be enough to overcome the adverse competition effects that arose from its £2.3bn purchase of Bass last year. The watchdog proposed the so-called "International Brewer remedy", which would see Interbrew divest certain Bass assets to an international brewer with existing UK interests, namely Carlsberg-Tetley or Heineken.
Interbrew, led by Hugo Powell, chief executive, favours this version, which it put forward in an attempt to avoid losing the entire UK brewing interests of Bass Brewers – the original remedy proposed by the Competition Commission in January. However, the OFT added yesterday that this complete disposal was "now not the only practicable remedy", although it was listed among the options.
The OFT appeared to rule out its final suggested remedy – selling the Whitbread brewing unit together with the licence rights to Interbrew's own Stella Artois brand – on the grounds of impracticality. Interbrew bought Whitbread's brewing unit early last year and said that integration was now too advanced to make its disposal a feasible solution.
The OFT has asked third parties to comment on the proposals by 18 July, before making its final recommendation to Patricia Hewitt, the Secretary of State for Trade and Industry.
Industry experts were sceptical that any remedy would work apart from requiring Interbrew to sell Bass Brewers in its entirety. "The consultation document confirms that the Competition Commission analysed the issue of remedies in great detail and that the Bass disposal remains the obvious and appropriate remedy," said one. This would leave Bass and Scottish & Newcastle each with around 25 per cent of the UK beer market, Carlsberg-Tetley with about 12 per cent and Interbrew with 10 per cent.Reuse content