Heineken UK gets green light for major Punch deal

Proposal to sell pubs in 33 areas wins over CMA But trade body continues attack on brewer

Heineken UK has won approval for its £403 million takeover of nearly 2,000 Punch Taverns pubs by offering to offload outlets in 33 areas to satisfy competition concerns.

But the decison by the Competition and Markets Authority(cma)togivethedealthegoahead yesterday was rapped by the Scottish Licensed Trade Association (SLTA) which has warned it will trigger higher prices for consumers and landlords, job losses and pub closures.

The CMA said in June that the deal could impact competition and see drinkers face higher prices in 33 locations – giving the companies time to address these concerns or face an in-depth probe.

Yesterday the regulator said: “Heineken has offered to sell pubs in each of the affected areas to preserve competition and ensure customers in these locations do not lose out.

“The CMA is satisfied that its concerns have been addressed andhasthereforedecidedthat the merger will not be referred for an in-depth phase two investigation.” Heineken UK, which employs 650 in Scotland, mainly at Edinburgh’s South Gyle business park, already has about 1,000 of its own tenanted pubs, giving it 3,000 once the Punch Tavern deal goes through.

However, it had said that even with the additional pubs it would only have 4 per cent of the UK beer market, and was therefore “not a major route to market for brewers”.

The Dutch brewer sealed the initial deal last December to snap up Punch Taverns with private equity firm Patron Capital. A spokesperson for Heineken welcomed yesterday’s announcement.

But an SLTA spokesman said: “Heineken may have had their merger with Punch Taverns green-lit but we still have serious concerns.

“They themselves say that they plan on concentrating on ‘entrepreneurial licensees’, which will probably mean that they will invest in a chosen few – upmarket, city-centre types. Definitely not the community-style pubs who often suffer investment bias and financial restrictions under tied agreements.

“Heineken will impose at least 85 per cent of their own products in Punch pubs, leaving little room for others. It’s restrictive and will disadvantage our home-grown producers.

“Plus we know that tied pubs are much more likely to close than those premises given the freedom to buy beer from those breweries that their drinkers want to drink.”

mflanagan@scotsman.com