Commission green lights Karlsberg buy

- Last updated on GMT

Related tags: European union

The European Commission has given the all clear to the purchase of
a stake in Germany's Karslberg by Heinken and its partner Bayrische
Brauholding, but has also extended an investigation into alleged
anti-competitive practices between the Dutch brewer and the Danish
Carlsberg group.

The consolidation of the fragmented German beer market has accelerated in recent years with a number of players, both large and small, becoming units of the major international beer groups.

The latest German brewer to follow this path is Karlsberg, which in June this year decided to join forces with Brauholding International, a joint venture between Dutch giant Heineken and the German Bayrische Brauholding, part of the Schorghuber group, which owns the Paulaner, Hacker-Pschorr and Kulmbacher brands.

Part of that agreement included the sale of a 45 per cent stake in Karlsberg's subsidiary Karlsberg International Brand to Brauholding International, a transaction which has just been given the green light by the European Commission.

Although the deal will leave Heineken and Bayrische Brauholding in control of the unit, which manufactures and distributes beer throughout Germany, the Commission said that the German market was so diverse there was no risk of the change of ownership proving anti-competitive.

The venture will also operate in the Netherlands, the UK, Spain and Greece, where there will also be no major impact on the market in terms of competition. Karlsberg's operations in France were not part of the original deal.

Karlsberg's decision to join forces with Brauholding International came as a result of the company's desire to gain greater international awareness for its brands. While the group had not been without its suitors, Karlsberg decided that the Heineken/Schorghuber partnership offered it the best opportunities for growth.

Heineken's beer is sold in 170 countries, and while Karlsberg has not been backward in developing its own international presence (such as the strong French business which it will continue manage on its own), it would take it many years to develop a network as extensive as this.

For its part, the deal will give Heineken a bigger presence in Germany, where its two main brands (Heineken and Amstel) are not widely known. Its tequila/beer mix Desperados is popular there, however, having been distributed by Karlsberg for several years.

Karlsberg in fact is a specialist in the beer mix market, and has created its own successful brand, MiXery, which will be one of the key products it will look to roll out to international markets.

Investigation launched

Meanwhile, the Commission has also launched a voluntary investigation of the relations between Heineken and the Danish brewer Carlsberg, no relation of the German group.

The Commission is investigating whether the two beer giants colluded between 1993 and 1996 in a bid to limit competition on their respective home markets. The Commission carried out dawn raids on the offices of both companies in March, and claims it ha evidence to suggest that the brewers acted illegally.

Carlsberg and Heineken have both strongly denied any collusion, claiming that talks between their respective managements at the time were merely courtesy talks which are widespread between the major industry players. Both companies have agreed to assist the Commission in its investigation, and are clearly confident that no evidence of wrongdoing will come to light.

Related topics: R&D

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