The UK's Secretary of State for Trade and Industry, Stephen Byers, has blocked the recent £2.3 billion takeover by Belgium's Interbrew of the brewing assets of UK leisure group Bass.

The Department of Trade and Industry, in a statement released today, said: "Mr Byers accepted the conclusions of the Competition Commission (CC) and advice of the Director General of Fair Trading (DGFT), that the merger may be expected to operate against the public interest."

The statement went on to say that Interbrew will be forced to sell Bass Brewers to a buyer approved by the DGFT.

Byers said: "I accept the conclusions of the CC, endorsed by the DGFT, that the merger would be against the public interest. This is because the merger would reduce competition in the market, lead to higher prices for end consumers, and reduce consumer choice.

"The CC found that the merger would strengthen Interbrew's market position, with four of the top ten selling beer brands, including two of the top three, Carling and Stella Artois. An effective duopoly in the industry between the two largest brewers/distributors, Interbrew and Scottish & Newcastle, would be created."

He continued: "The CC expected this to cause higher prices for end consumers, a concentration on leading brands, leading to reduced consumer choice and reduced competition in retail, again to the detriment of consumers."

But the most damaging part of the statement was that Byers agreed Interbrew would have to sell off Bass only months after completing the purchase.

Byers said: "The CC conclude that the only remedy which deals adequately with the adverse effects identified is for Interbrew to divest itself of Bass Brewers in the UK. The DGFT endorses this conclusion, and I have accepted it. I have asked the DGFT to seek suitable undertakings from Interbrew to effect the disposal."

The government suggested Interbrew would have little trouble finding a buyer for Bass Brewers and said "a number of international brewers" would find it an attractive vehicle for entry or expansion into the UK.

Among the likely contenders to take the business off Interbrew's hands are
Heineken and Danish rival Carlsberg. SAB and Anheuser-Busch are also possibilities.

An Interbrew spokesman could not be reached to make a statement on the announcement. But the company has been reported as saying: "The company is currently reviewing the full text of the Secretary of State's statement and the associated report from the Competition Commission. A further statement will be made shortly."

Shares in Interbrew were quoted at Euro34 in halted trade today compared to a last trading price of Euro37.3 ahead of the UK authorities' decision to force a resale.