As previously reported by The Morning Advertiser (MA), Marston’s Brewing Business and Carlsberg UK announced their intention to merge and create Carlsberg Marston’s Brewing Company in a £780m deal on 22 May.
However, after writing to the CMA in June expressing concern over the potential impact of the joint brewing venture, which will be 60% owned by Carlsberg UK, with Marston’s holding the remaining 40%, CAMRA has again called upon the CMA to investigate the deal.
In an appeal to the competition body’s chief executive, Dr Andrea Coscelli, CAMRA’s chief executive Tom Stainer explained the joint venture could have anti-competitive effects on the UK beer and pub market.
“Since the day that it was announced, CAMRA has raised serious concerns about the proposed Carlsberg Marston’s Brewing Company and choice for beer drinkers, pub goers and over the future of British beers, brands and breweries,” Stainer said.
“We wrote to the CMA back in June and asked them to investigate. We were surprised to be told it wasn’t a matter for them, and that we should talk to the EU Commission instead.
“We don’t understand why the CMA does not seem interested in investigating something that will clearly have an impact on choice of beer on the bar in pubs.”
According to CAMRA’s calculations, the UK beer and pub market is becoming less competitive with global brewers currently holding a 25.25% share of UK pub companies, which CAMRA forecasts will rise to almost 32% if the proposed joint venture is allowed to proceed.
In its latest appeal, CAMRA asks the CMA to trigger what is known as the Article 9 referral procedure - meaning the UK competition body could lead an investigation instead of the EU Commission because the joint venture will mainly impact the UK beer and pub market.
“The CMA exists to promote competition for the benefit of consumers therefore, it is disappointing that they are seemingly disinterested in investigating something that will have potentially anti-competitive effects on the UK beer and pub market.
“It is vital the CMA steps up the plate, thoroughly investigates the proposed joint venture between Marston’s and Carlsberg, and helps to ensure there is fair competition, access to market for brewers, and decent consumer choice when it comes to beer and pubs up and down the country.”
The CMA cast an eye over merger and acquisition activity in the pub sector as recently as October 2019 when it investigated Stonegate’s £1.27bn acquisition of Ei Group, which would see the former’s pub estate rise by around 4,000 sites and become the UK’s largest pub operator.
The competition body approved the proposed acquisition in February 2020 after both parties satisfied the watchdog that a package of 42 pubs would be sold to avoid potential monopolies.
A spokesperson for Carlsberg UK said: “The proposed joint venture between Carlsberg UK and Marston’s Brewing Company brings together two historic brewers to create a better beer business, with complementary beer portfolios and a sustainable future in UK brewing.
"This will add value to beer-drinkers, customers, suppliers and the employees of both brewers. In respect of anti-trust, we are cooperating with the relevant authorities and do not see any concerns arising from the joint venture.”
When asked about the joint venture’s plans for Marston’s existing collection of UK breweries and sub-brands and how Carlsberg Marston’s Brewing Company will promote diversity and consumer choice in Britain’s pubs in May, Carlsberg UK’s CEO Tomasz Blawat, who will head Carlsberg Marston’s Brewing Company as its CEO, told MA that his vision is to combine Carlsberg’s lager credentials with Marston’s cask ale expertise to form “an enviable beer and beverage portfolio”.
“One of the greatest strengths of the Marston’s business is its portfolio of regional brands that are brewed locally,” Blawat said. “It will remain important to the joint venture that we continue to have a local brewery for consumers of these brands.
“Ultimately, Carlsberg Marston’s Brewing Company will have complementary international, national and regional beers and brands to offer to pubs and beer drinkers.”
Carlsberg brands include Carlsberg Danish Pilsner, Carlsberg Expørt, Poretti, Tetley’s, Somersby cider and the London Fields Brewery craft portfolio, while the Danish beer giant also holds the brand licences in the UK for San Miguel, Mahou and the Brooklyn Brewery craft beer portfolio.
Marston’s, which operates around 1,350 pubs, produces cask and packaged ales including Hobgoblin, Wainwright, Marston’s Pedigree and 61 Deep, while operating a number of brands under licence with global brand owners such as Estrella Damm, Shipyard, Erdinger, Warsteiner and Kirin.
Letter sent from CAMRA to the CMA on 13 July 2020
The letter from CAMRA to the CMA in full:
Dear Dr Coscelli,
I am writing to you regarding the proposed £780m Joint Venture between Marston’s PLC (“Marston’s”) and Carlsberg UK Holdings Ltd (“Carlsberg”) – the Carlsberg Marston’s Brewing Company (“CMBC”), which has now been approved by Marston’s shareholders. CAMRA is an independent, voluntary organisation representing nearly 190,000 individual beer consumers and pub-goers.
CAMRA wrote to the CMA on Thursday 25 June 2020 regarding the proposed Joint Venture, a copy of which is included below, requesting the CMA open a Phase 1 Investigation. This outlined our concerns regarding potential anti-competitive effects and possible market foreclosure for certain segments of the UK brewing sector. We received a response on Thursday 2 July stating ‘it seems the European Commission is the competition authority that has jurisdiction to review this case’, and we should write to the Commission.
This response was surprising. As our initial letter outlines, we believe the proposed joint venture is likely to have localised anti-competitive effects, which will almost exclusively affect the UK beer and pub market, thus warranting investigation by the CMA.
We have since entered into direct discussions with the EU Commission Competition Directorate on the possible anti-competitive effects of the joint venture. They similarly expressed their surprise that the CMA appeared reluctant to deal with this case, but informed us that they consider CAMRA a primary consultee when the joint venture is formally notified to the Commission.
It is our understanding, that under Article 9 of the EU Merger Regulation, a Member State can request referral jurisdiction to investigate large transactions where localised competitive effects will occur. While we are aware that this can only be formally requested after official notification of the transaction to the Commission, we also understand that discussions on prior notification between Members States and the Commission is common.
Based on our contact with the CMA and the EU Commission, we do not believe any prior discussions have taken place, which is extremely disappointing given that the effects of the joint venture will be solely felt in the UK.
We would grateful if could you confirm, as soon as possible, if the CMA intends to make a formal request to the Commission under Article 9 and launch a full investigation the proposed Joint Venture.
CAMRA chief executive