Commission throws proposed takeover of Beamish into doubt

HEINEKEN’S takeover of Beamish & Crawford has been seriously questioned by the European Commission.

If sanctioned, the deal could drive up the cost of booze in Ireland and sound the death knell for either the Beamish or Murphy stout brand, both of which are brewed in Cork.

In its report, which has been passed to the Irish Competition Authority, the commission argues the takeover of Beamish could basically lead to a cozy cartel between Diageo, owners of Guinness, and Heineken.

It would in effect deny the market of the only real competitive force in the market.

The tone of the report raises deep concerns at commission level the Irish authority will find hard to ignore. It argues strongly that Beamish is the one company that has tried to inject price competition into the Irish stout market, and that it has always been more competitive across a range of products that the big players.

The report also raises concerns that the distribution of Miller in Ireland, a Beamish franchise, would be pulled by parent group SAB Miller, further cutting competition.

If the deal in its current form is blocked the managing director of Beamish, Alf Smiddy, could attempt a management buyout of the business, it has already been speculated.

In the case of lager the commission said: “As a result of the proposed transaction, the merged entity would become the market leader in the on-trade lager market with a share of 50.6% followed by Diageo with 42%.”

And it goes on to say that transaction “would result in a virtual duopoly in this market”.

The report goes on to say that S&N, owners of Beamish, “plays the role of the most price aggressive player on the market and its efforts are in strong contrast with the existing commercial policy of Heineken”.

It adds that “according to one respondent, [S&N] has always been more price aggressive than Heineken.”

By contrast, Heineken is always priced at a premium with little or no dealing on price while Foster’s “is sold at €3 a pint against the regular price of €4 for other lagers”.

The report concludes: “Heineken has never engaged in discounting”.

A Heineken spokesman said that the group has already stressed its “full commitment to continuing both the brewing of Beamish and Murphys stout in Cork”.

He added that a strong second competitor to Diageo was the best guarantee of competition in the Irish market.

The Competition Authority investigation is not expected until the second half of the year.


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