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Heineken asked to address competition concerns related to Punch Taverns acquisition

Published 14 June 2017

UK Competition and Markets Authority (CMA) has found that Heineken’s £403m bid to acquire Punch Taverns estate could reduce competition in over 33 places across the country.

The regulator has asked the Dutch brewing company to address these issues by June 20 or the acquisition deal will face an in-depth investigation.

CMA has found that Heineken and Punch currently operate and compete in several places, but there are 33 local areas where there will be no sufficient competition after the merger.

According to the regulator, this could result in price increase or deterioration in the quality of service on offer.

It stated that the merger could close an important route for small brewers, who could compete with Heineken, but the number of pubs being acquired only sum up to 4% of the market in the UK and hence, it is not a major area of concern.

CMA also raised the issue of the beers that will be offered by Heineken once the pubs are being taken over and found that it could be limited as well, as Punch’s current stocks and the range of drinks available in Heineken-owned pubs is not of significant difference.

It also found that Heineken would not have a strong incentive to reduce the range of beer and cider, in part because doing so would risk losing business in pubs where this is important to customers.

CMA acting chief executive and decision maker in the case Andrea Coscelli said: “We have listened very carefully to a range of concerns about this merger.

“The companies will own less than 10% 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.

“Heineken will now have the chance to offer proposals to address these concerns - otherwise we will carry out an in-depth investigation.”

After the regulator raised concern, Heineken said that it intends to offer acceptable undertakings and is confident that the redressal of concerns will enable the transaction to be approved by the CMA without a Phase 2 referral.

Heineken UK managing director David Forde said: "This decision by the CMA acknowledges that there are only a small number of local areas where competition may be diminished due to our acquisition of the pubs.

Image: Heineken asked to resolve issues raised by CMA over Punch Taverns merger. Photo: Courtesy of Heineken N.V.