Heineken deal to buy Punch pubs draws concern from watchdog
Dutch brewing giant Heineken has been given until June 20 to address competition concerns in 33 UK areas before approval is given for its £400m takeover of of the pubs company Punch Taverns.
The UK’s Competition and Markets Authority on Tuesday said the Dutch brewer must “offer proposals to address these concerns by 20 June or face an in-depth investigation into the merger”.
Andrea Coscelli, CMA acting chief executive and decision-maker in the case, said:
We have listened very carefully to a range of concerns about this merger. The companies will own less than 10 per cent of all British pubs after any deal, but we are concerned about the loss of competition for pub goers in a number of local areas. Without sufficient competition from rivals, pubs in these areas might be able to raise prices or worsen the service they offer customers.
She said: “Heineken will now have the chance to offer proposals to address these concerns – otherwise we will carry out an in-depth investigation.”
In response, both Heineken and Punch said they were confident they could allay concerns.
The planned £400m cash deal was approved by Punch shareholders in February. Under the plan, the Dutch brewing company, the world’s second-largest after Anheuser-Busch InBev, would acquire 1,900 of Punch’s 3,350 pubs and become the number three pub company in the UK after Greene King and Enterprise Inns. The remaining Punch pubs would be bought by Heineken’s partner in the deal, Patron Capital, a property investment fund.
In its announcement on Tuesday, the CMA said it had also considered the impact the deal would have on brewers that compete with Heineken but concluded that the pubs acquired would only represent around 4 per cent of the British market and “are therefore not a major route to market for brewers”.
On the issue of whether choice on offer to drinkers would suffer, the CMA also dismissed concerns pointing out Heineken would not have a strong incentive to reduce the range of beers and cider “in part because doing so would risk losing business in pubs where this is important to customers.”