Competition concerns over Heineken takeover of Beamish

The largest publicans' lobby group has expressed concern about a potential reduction of competition in the beer market if Heineken proceeds with its takeover of Cork brewer Beamish & Crawford. Arthur Beesley, Senior Business Correspondent, reports.

Beamish is controlled by British firm Scottish & Newcastle (S&N), which is the subject of a £7.8 billion (€10.47 billion) joint bid from Dutch group Heineken and its Danish rival Carlsberg.

They plan to divide S&N's assets, with its Irish interests going to Heineken.

However, some Irish drink industry sources believe the integration of Beamish into Heineken would create an effective duopoly with Guinness owner Diageo, whose brands have 70 per cent of the on-trade beer market.

Heineken and its sister brands have 21 per cent of the market, and Beamish's brands have a 9 per cent share.

"It is our opinion that the status quo has worked well over the years, and as such we would be disappointed to see any major change," said a spokesman for the Vintners' Federation of Ireland, which represents more than 5,000 publicans outside Dublin.

"We trust that an acceptable level of competition will be maintained in all circumstances."

The spokesman noted that the transaction was subject to regulatory approval, and added that it would be "mere speculation" to comment on the potential impact the deal at this time.

"The VFI is obviously keeping a close eye on this issue, but it is not something we can have a major input into."

While certain industry sources speculate that Beamish's management might advance a buy-out if the Irish part of the S&N deal is disallowed for competition reasons, Heineken's Irish spokesman said yesterday that the company was "committed to executing the deal in each of its relevant markets".

The deal is subject to shareholder approval, and it is likely to be scrutinised by the Competition Authority after an examination by the European Commission's competition division.

In addition to Guinness stout, Diageo also owns Budweiser and Harp lager, Smithwicks ale and the rights for Carlsberg lager in Ireland. As well as Heineken lager, the Dutch group's sister brands are Murphy's stout and Coors and Amstel lager.

Beamish brews Beamish stout and its sister products are the lager brands Miller, Foster's, San Miguel and Kronenbourg.

Murphy's and Beamish are brewed in separate breweries in Cork, and there is concern in that city that the S&N deal could lead to the closure of one of those plants.