The Competition Authority's decision to give the go-ahead to Guinness to complete the purchase of United Beverage Holdings (UBH), the biggest drinks distribution company in the State, will create a "one-stop shop" - and only one such shop - for drinks products in Ireland, the High Court was told yesterday.
Guinness is clearly dominant in all the relevant drinks markets, the court heard. The fact it had so many leading brands which were household names, combined with the domination that would emerge from its control of so much of the distribution network through the acquisition of UBH, created a "portfolio effect" which could restrict entry to the drinks market, it was claimed.
The claims were made in submissions from Irish drinks manufacturers and distributors read to the court on the opening day of a challenge taken by Murphy's Brewery, Cork, and three other companies, M and J Gleeson and Company, Comans Wholesale Ltd and J. Donohoe Ltd, to the decision of the authority to sanction the Guinness buyout of UBH.
Guinness paid out £33 million (#41.9 million) last year for that part of UBH it did not own. In return, Guinness agreed to sell its 49.5 per cent stake in Cantrell & Cochrane (C&C) for £270 million sterling to Allied Domecq. The decision is stated to have left the new Diageo group - Guinness and Grand Metropolitan - in control of the first and third-largest drinks wholesalers, with a minority stake in the second-largest.
The hearing continues today.
