Carlsberg and Heineken Satisfy Antitrust Conditions for Acquisition of Scottish & Newcastle

04/04/08 The European Commission has approved under the EU Merger Regulation the proposed acquisition by the Dutch company Heineken of the businesses of UK-based brewer Scottish & Newcastle in Belgium, Finland, Portugal and the United Kingdom as it found that the transaction would not significantly impede effective competition on these markets. At the same time, the Commission has referred Heineken's proposed acquisition of Scottish & Newcastle's business in Ireland to the Irish Competition Authority following the latter’s request under the EU Merger Regulation. After a preliminary investigation, the Commission found that the proposed transaction threatens to significantly affect competition in the beer markets in Ireland. Those aspects of the transaction will now be examined by the Irish Competition Authority under national law.

Scottish & Newcastle (S&N) is a public company with interests in the production and distribution of beer, soft drinks and mineral water in a number of countries around the world. Its beer brands include Foster's, Kronenbourg and Grimbergen.

Heineken is active worldwide in the production and distribution of beer and other beverages. Its principal international beer brands are Heineken and Amstel.

On 25 January 2008, a consortium formed by Carlsberg and Heineken announced a public bid for the entire share capital of S&N. If the bid were successful, it would lead to the division of S&N between Carlsberg and Heineken. The consortium's bid is considered to give rise to two distinct concentrations: one in respect of those S&N assets to be acquired by Carlsberg and a second covering those assets to be acquired by Heineken. The first concentration was cleared by the Commission on 7 March 2008 (see IP/08/403).

In its request for referral, the Irish Competition Authority claims that the transaction threatens to affect significantly competition in the Irish beer markets, in particular with regard to lager.

This was confirmed by the Commission’s preliminary market investigation. The Commission found indications that the beer markets in Ireland are currently characterised by two strong players Heineken and Diageo, and that S&N, via its Irish subsidiary Beamish & Crawford, constitutes an important challenger. The removal of S&N as a competitor in Ireland risks eliminating competitive pressure on Heineken and Diageo and potentially harming consumers.

Furthermore, based on its preliminary investigation, the Commission could not exclude the existence of competition problems for stout on a regional level.

Against this background and given that the Irish Competition Authority in the Commission's view is best placed to investigate the effect of the transaction on the Irish market, the Commission has referred the assessment of the Irish part of the transaction to the Irish Competition Authority.

With regard to other national markets, the transaction will not bring about any sizeable overlap of activities. Consequently, the Commission has concluded that the proposed transaction will not give rise to any significant reduction of competition on these markets.