The Competition and Markets Authority has cleared the proposed joint venture between brewing companies Carlsberg and Marston’s.
The decision follows an investigation into several possible ways in which the deal could harm competition in the supply of beer and cider in the UK, said the government.
As pubs currently owned or operated by Marston’s might choose to sell fewer independent brands after the merger in favour of more Carlsberg products, the CMA considered whether access to pubs by smaller independent brewers could be adversely affected as a result of the deal.
The CMA found, however, that Marston’s pubs form only a small part of the potential UK customer base for brewers, and that independent brewers would continue to have sufficient access to pubs after the merger, allowing them to compete effectively.
The CMA also considered whether combining the wholesaling services that both companies provide, through which they distribute their own and other producers’ drinks to pubs and restaurants, could raise competition concerns.
While the establishment of the joint venture means that the two businesses are likely to distribute each other’s products more frequently, potentially leaving less room to take on other brands, the CMA found that brewers will continue to have sufficient alternative wholesalers to choose from after the merger.
‘We believe that the UK beer market needs constant monitoring by the competition authorities’
In relation to their role as brewers, the CMA found that Carlsberg and Marston’s have different areas of focus, meaning competition between the two businesses is generally limited at present, with Carlsberg largely focusing on the production of lager and Marston’s on ale. They also face several competitors in all of the product categories where they are both active.
CAMRA chairman, Nik Antona, said: “We are increasingly concerned with the dominance of global brewing brands in the UK beer market and the impact this has on consumer choice. This joint venture is the latest in a series of merger and acquisition activity which has seen many styles and brands disappear since the early 2000s.
“While we have seen an increase in the number of small brewers producing some great and varied beers, these brewers account for less than 6% of the total market and are, therefore, unable to provide effective competition. Many of these smaller brands cannot access the pub market due to the dominance of supply and distribution agreements operated by pub companies and global suppliers.
“In addition, two small brewers are now closing every week, due to ongoing restrictions on the sector and a lack of proper support package. On top of this, the government is planning changes to small brewers’ relief that will increase the amount of tax some small brewers pay.
“‘We are grateful to the CMA for engaging with us and listening to our concerns about the joint venture and will continue to raise our concerns about competition issues in the sector with them. We believe that the UK beer market needs constant monitoring by the competition authorities.”