UK: Competition watchdog blocks Coors SEDL deal
The Competition Commission (CC) has blocked the proposed acquisition by Serviced Dispense Equipment Limited (SDEL) of the technical services function of Coors Brewers Limited (Coors). SDEL is a joint venture company formed in 2004, merging the technical services businesses of Scottish Courage Ltd and Carlsberg UK Ltd.
In a statement the CC pointed out that the merger would have increased SDEL's share of the technical service equipment industry and related servicing to between 55 and 60% per cent "leading SDEL to be several times larger than the next largest providers".
The CC said it found that this would have led to less competition, which would be likely to lower standards and raise prices of TSE and related servicing.
This confirms the conclusion of the provisional findings report published in January.
"After considering alternatives, the CC has concluded that the only effective remedy to address the anti-competitive outcome is to prohibit the merger. It looked carefully at the remedies packages proposed by the parties, but did not think that they would be effective in addressing the SLCs identified in the TSE and related servicing markets," a statement said.
Professor Paul Geroski, chairman of the CC and the SDEL/Coors inquiry group, said: "Our view is that by blocking this merger it is more likely that a fully functioning market for technical services equipment and related servicing will develop. This will be good news for both pub companies and their customers. Independent suppliers of these services are slowly starting to emerge but competition is currently limited, in particular, by the brewers' strategy of bundling the provision of the equipment and services in with the price of beer, and their ownership and control of this equipment. We have suggested that the Office of Fair Trading consider whether a market investigation into the pricing or supply of beer may be appropriate."
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