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UK: SDEL Coors deal dealt competition blow

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The UK's Competition Commission (CC) has dealt a blow to the proposed acquisition by Serviced Dispense Equipment Limited (SDEL) of the technical services function of Coors Brewers Limited (Coors).

The CC's findings said the acquisition could be expected to result in a substantial lessening of competition within the markets for technical services equipment (TSE) for the dispense of draught beer and related technical services (TS).

SDEL is a joint venture company formed earlier this year, merging the technical services businesses of Scottish Courage Ltd and Carlsberg UK Ltd. The proposed addition of the technical services function of Coors to this joint venture was referred to the CC by the Office of Fair Trading (OFT) on 29 September 2004. 

There are currently around 149,000 outlets for the supply of draught beer in the UK, the vast majority of which require TSE and TS. TSE, which includes, for example, coolers and lines running from the cellar to the bar in outlets, and related TS, are typically provided by the brewer. 

Professor Paul Geroski, chairman of the CC and the SDEL/Coors Inquiry Group, said: "Our evaluation of the evidence we have gathered leads us to conclude provisionally that the effect of this proposed merger would be to substantially lessen competition in the markets for technical services equipment and related technical services.

"These markets are in their infancy and competition is currently limited by several existing features. Among these are the brewers' strategy of bundling the provision of the equipment and services in with the price of beer, the interdependency of TSE and TS coupled with brewer ownership of TSE, and the high levels of customer inertia to switching. 

"The increase in SDEL's market power that would result from the addition of Coors's technical services function would be likely to lead to less competition in both these markets than would otherwise have been the case. This can be expected to have adverse effects in quality and price," he added.

The full provisional findings report will be published within the next week along with a notice of possible remedies to address the anti-competitive outcome. The CC said it will now invite responses from the main parties and other interested parties on the provisional findings and on possible remedies by 25 January.


Sectors: Beer & cider

Companies: Carlsberg

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