MyShout
The possibility that Scottish & Newcastle could be bought should concern us all, says
John Grogan
Last weekend's financial press reported that Scottish & Newcastle was reportedly preparing a "braveheart" defence to the attempts by Carlsberg and Heineken to take it over.
Options mentioned included finding a partner to help buy out Carlsberg's stake in the hugely-profitable Baltika business based in the former Soviet Union, which is currently a Scottish & Newcastle/Carlsberg joint venture.
The question for British pub owners and licensees is does the outcome of this battle of brewing titans matter to them? I rather think it might.
Although Carlsberg and Heineken have yet to make a formal offer for Britain's largest brewer, it seems clear that Heineken would take over the British business and Carlsberg most of the overseas assets. Would Heineken, which would inherit almost 30% of our total beer market, continue the joint ventures that Scottish & Newcastle has developed with Theakstons, Wells & Young's and Caledonian, enhancing the choice and diversity of beers on offer?
There is a widespread fear that they might be tempted to concentrate even more on their core market of Continental lagers.
Moreover, in April 2007 Heineken was fined along with Grolsch and Bavaria a total of @273m by the European Commission for price fixing and operating a cartel in the beer market in the Netherlands.
Neelie Kroes, European Commissioner for Agricultural Policy, said that the brewers tried to cover their tracks by using code names and abbreviations for secret meetings as they carved up the Dutch market for beer sold to supermarkets, hotels, restaurants
and cafés.
The price fixing the companies were involved in
even extended to cheaper own-brand labels and rebates for bars.
The commissioner concluded that she was "very disappointed to learn from our investigation into this case that the management of these companies at the very highest levels participated in this cartel actively despite knowing that this behaviour was illegal".
In the United States such behaviour can lead to business executives being jailed and Heineken needs, at the very least, to give assurances as to why they would behave differently in Britain.
Scottish & Newcastle has also led the way in
co-operating with the British Government in developing the "sensible drinking" agenda and ministers may well be concerned if decisions on such issues of social and corporate responsibility lose any distinctive British flavour.
Ultimately the outcome of this takeover bid will be determined by considerations of shareholder value, although it is perhaps worth noting that neither the ownership structure of Carlsberg nor Heineken leaves them open to a similar bid.
There is a chance that the European Commission may step in, worried about the creation of a duopoly emerging in the beer markets of several other European countries.
Given all this considerable uncertainty, Heineken and Carlsberg have a lot of work to do to persuade the average Brit not to raise a glass in support of the "braveheart" defence.
John Grogan is Labour MP
for Selby, North Yorkshire
