Challenge to Guinness's buying of UBH is settled

A challenge by a number of drink manufacturers and distributors to the Competition Authority's decision to give the go-ahead to Guinness to complete the outright purchase of United Beverage Holdings (UBH) has been settled after marathon talks.

As part of agreements read to the High Court yesterday, Guinness Ireland Group Limited, as a supplier and as the holder of 100 per cent interest in UBH has undertaken, for a five year period from February 23rd, 1999, to continue to make packaged beer and soft drinks products available to all conventional wholesalers on terms common to those wholesalers (list prices with published available discounts), including wholesalers controlled by Guinness.

It has also undertaken not to restructure pricing to traditional wholesalers so as to redirect profits in favour of Guinness as a supplier.

Mr Denis McDonald, for Guinness, said his client undertook, when running brand promotions, to treat all conventional and traditional wholesalers on the same basis as it treats any wholesaler owned by Guinness. The company has further undertaken to ensure that UBH will be a separate business within Guinness, with its own management structure, and to cause UBH, or any other wholesaler controlled by Guinness, to continue to accept supplies of and sell the products of Murphy Brewery Ireland Limited (MBIL) in the same way in which it has done previously through its existing wholly owned wholesalers, Deasy & Company Limited and The Connacht Mineral Water Company Limited.

Guinness said the full portfolio of MBIL products including future products will be listed by UBH, Deasy and Connacht and that those three companies will maintain sufficient stocks of MBIL products to meet trade demands and fulfil customer orders received for MBIL products on time and in full.

Guinness will also cause UBH, Deasy and Connacht to accept supplies of, sell and distribute the products of all the suppliers without seeking to favour the products of one suppliers over another.

The Guinness undertaking is subject to there being no fundamental and material change by the suppliers and the conventional wholesalers in the existing basis of trading. That basis is set out in the agreement and it involves the traditional wholesalers accepting supplies of and selling and distributing the products of all the suppliers, without seeking to favour the products of one supplier over another, irrespective of who owns the traditional wholesaler.

Shound the basic structure of the system of wholesaling and distribution of the products in the Republic of Ireland change fundamentally and materially, Guinness must have the ability to react and adapt to any such change, it is stated in the agreement.

Mr Justice Kearns was told yesterday that intensive talks between the various parties to the 23-day action had run from 8 a.m. on Monday to 2 a.m. yesterday before resuming at 9.30 a.m. yesterday and continuing throughout the day.

At 4.45 p.m. yesterday, the judge was told by Mr Gerard Hogan SC, for M & J Gleeson & Company, Comans Wholesale Limited and J Donohoe Limited, that there was agreement.

Mr Justice Kearns congratulated the parties on reaching agreement and on devising their own solution to a case which arose against the background of "such cumbersome legislation".