A disagreement has developed between the Competition Authority and the Department of Enterprise, Employment and Trade after the Minister, Ms Harney, was forced to withdraw an earlier referral made to the authority.
Yesterday, Ms Harney had to withdraw the referral, made last Friday, of the proposed takeover by Guinness Ireland of United Beverages Holdings (UBH).
The decision to withdraw came after the Department was told the referral had been made four days later than the 30-day deadline allowed under the Mergers and Monopolies Act.
Yesterday, sources said advice from the Competition Authority itself had given the Department a misleading impression of when the referral needed to be submitted.
However, a spokesman for the Competition Authority said it was the Department's own responsibility to make sure referrals were submitted on time.
The referral should have been submitted 30 days after the first notification date, June 3rd, but the Department believed the 30 days began from when it received additional information from the parties on the July 4th. The spokesman for the Competition Authority said the agency was completely independent of the Government and did not give legal advice to any Department.
However, a Government source said officials were "surprised" to be told by the authority that the referral would not be accepted. "An advertisement was placed in the paper last Monday inviting submissions on the issue, three days after we submitted the referral, so we presumed if the advertisement was sanctioned, everything was correct," said the source.
Ms Harney is now "considering alternative means of addressing her concerns about the proposed merger, including options available to her under the Competition Acts", said a statement.
The Minister is also believed to be anxious that Guinness Ireland divest itself of its 49 per cent holding in Cantrell and Cochrane (C&C).
In a statement, Guinness Ireland said it was satisfied the proposed takeover did not "in any way contravene the Competition Act and welcomes the opportunity to have an early meeting with the Minister for Enterprise, Employment and Trade to discuss any concerns which she may have".
It is understood the acquisition will remain "on hold" until Ms Harney indicates what options she is considering "as means of addressing her concerns".
She is expected to meet the board of Guinness Ireland in the first week of September and impress on it her concerns about the dangers of the takeover leading to Guinness being in a dominant position in the drinks market. UBH is involved in the manufacture of soft drinks and the distribution of bottled and canned beer. Its main soft drinks brand is Finches, but it also distributes Cadet, Corcorans and Splash.
UBH also distributes Woodies, the alcopop drink, and packaged beers for most of the major brewers, holding an estimated 27 per cent share of this sector of the market.
The proposed deal between Guinness and UBH is valued at about £48 million. Guinness already has a 30.8 per cent stake in UBH, which has an annual turnover of about £80 million and returned profits after tax last year of £4.3 million.
