Leading consumer group CAMRA has called on the Competition and Markets Authority to take the lead and investigate a proposed merger which could reduce the choice of beers available to pubgoers. The new appeal to Chief Executive, Dr Andrea Coscelli, follows a string of correspondence about the proposed joint venture between Carlsberg and Marston’s that CAMRA believes could have significant anti-competitive effects on the UK beer and pub market. The Campaign is now asking the CMA to prove its credentials in standing up for consumers and commit to triggering what is known as the ‘Article 9’ referral procedure – meaning that the UK competition body could lead an investigation instead of the EU Commission, because the joint venture will mainly impact the UK beer and pub market. CAMRA’s calculations show that the UK beer and pub market is becoming less and less competitive with every new merger or acquisition of a smaller brewer by a global brand. Global brewers currently have a 25.25% share of UK pub companies, which by CAMRA’s calculations will rise to nearly 32% if the proposed joint venture is allowed to proceed without intervention. Commenting, CAMRA Chief Executive Tom Stainer said: “Since the day that it was announced, CAMRA has raised serious concerns about the proposed Carlsberg Marston’s Brewing Company and choice for beer drinkers, pub goers – and over the future of British beers, brands and breweries. “We wrote to the CMA back in June and asked them to investigate. We were surprised to be told that it wasn’t a matter for them, and that we should talk to the EU Commission instead. We don’t understand why the CMA does not seem interested in investigating something that will clearly have an impact on choice of beer on the bar in pubs. “The Competition and Markets Authority exists to promote competition for the benefit of consumers – therefore it is disappointing that they are seemingly disinterested in investigating something that will have potentially anti-competitive effects on the UK beer and pub market. “It is vital that the CMA steps up the plate, thoroughly investigates the proposed joint venture between Marston’s and Carlsberg, and helps to ensure there is fair competition, access to market for brewers, and decent consumer choice when it comes to beer and pubs up and down the country.”
Notes to editors:
The full text of the letter to Dr Andrea Coscelli, and the previous letter that CAMRA sent to the CMA are copied below.
Dr Andrea Coscelli CBE
Competition and Markets Authority
25 Cabot Square
13 July 2020
Dear Dr Coscelli,
I am writing to you regarding the proposed £780m Joint Venture between Marston’s PLC (“Marston’s”) and Carlsberg UK Holdings Ltd (“Carlsberg”) – the Carlsberg Marston’s Brewing Company (“CMBC”), which has now been approved by Marston’s shareholders. CAMRA is an independent, voluntary organisation representing nearly 190,000 individual beer consumers and pub-goers.
CAMRA wrote to the CMA on Thursday 25 June 2020 regarding the proposed Joint Venture, a copy of which is included below, requesting that the CMA open a Phase 1 Investigation. This outlined our concerns regarding potential anti-competitive effects and possible market foreclosure for certain segments of the UK brewing sector. We received a response on Thursday 2 July stating that ‘it seems that the European Commission is the competition authority that has jurisdiction to review this case’, and that we should write to the Commission.
This response was surprising. As our initial letter outlines, we believe that the proposed Joint Venture is likely to have localised anti-competitive effects which will almost exclusively affect the UK beer and pub market, thus warranting investigation by the CMA.
We have since entered into direct discussions with the EU Commission Competition Directorate on the possible anti-competitive effects of the Joint Venture. They similarly expressed their surprise that the CMA appeared reluctant to deal with this case, but informed us that they consider CAMRA a primary consultee when the joint venture is formally notified to the Commission.
It is our understanding, that under Article 9 of the EU Merger Regulation that a Member State can request referral jurisdiction to investigate large transactions where localised competitive effects will occur. While we are aware that this can only be formally requested after official notification of the transaction to the Commission, we also understand that discussions on prior notification between Members States and the Commission is common.
Based on our contact with the CMA and the EU Commission, we do not believe that any prior discussions have taken place, which is extremely disappointing given that the effects of the Joint Venture will solely felt in the UK.
We would grateful if could you confirm, as soon as possible, if the CMA intends to make a formal request to the Commission under Article 9 and launch a full investigation the proposed Joint Venture.
CAMRA Chief Executive
COPY – Letter sent from CAMRA to the CMA on 25 June 2020
I am writing to request that the Competition and Markets Authority commences a Phase 1 assessment of the proposed £780m joint venture between Marston’s PLC (“Marston’s”) and Carlsberg UK Holdings Ltd (“Carlsberg”) – the Carlsberg Marston’s Brewing Company (“CMBC”), due to be approved by Marston’s shareholders today, Thursday 25 June 2020.
CAMRA is an independent, voluntary organisation representing nearly 190,000 individual beer drinkers and pub-goers. It is our belief that the proposed joint venture will result in a substantial lessening of competition in the on-trade due to market foreclosure effects and further vertical integration of the beer market, which will consequently have a significant impact on consumer choice.
The proposed joint venture will result in CMBC being able to impose stocking requirements on the 1,400 pubs that Marston’s PLC owns through a long-term supply and distribution agreement and will give CMBC access to further 11,000 customers that Marston’s supplies from its current brewing business.
The proposed joint venture needs to be assessed in the context of a “tight” oligopoly beer market. With a combined market share of 67.1 % the world’s top four foreign brewing brands dominate both on and off-trade UK beer markets. This dominance is underlined by the acquisition of the top two UK independent brewers (Greene King and Fuller’s) in recent years by foreign-owned global brewers and property asset companies.
Moreover, the UK beer market does not operate within a properly functioning market due to the ‘beer tie’ and purchasing, supply and distribution exemptions which restrict independent brewers from having proper access to the on-trade market – UK small brewers share of the tied pub market is currently around 5%. Conversely, vertically integrated global brewers currently have a 25.25% share of pub companies, which by CAMRA’s calculations will rise to nearly 32% if the proposed joint venture is allowed to proceed without intervention.
CAMRA believes that the competition issues that arise from the CMBC joint venture are enough to merit a Phase 1 assessment which we would expect to establish the grounds for reference to a Phase 2 investigation. The Competition and Markets Authority should undertake an analysis of the impact of the proposed joint venture on local and regional beer markets that will be most affected.
The proposed joint venture should only be allowed to proceed with safeguards in place to maintain market access for competing brewers and preserve consumer choice which is effectively precluded due to the vertical restraints imposed by the proposed joint venture company. A potential safeguard would be conditions which would allow small and medium sized brewers access to the supply chains and pub outlets of the proposed joint venture.
 Calculation made using data from Statista 2018 Alcoholic Beverages (2020) and blog.technavio.com Top 10 Largest Beer Companies and their Brands in the Global Beer Market 2019
 SIBA Craft Beer Report 2020