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Brussels, 23 November 2000

Commission clears Scottish & Newcastle buy of a stake in Portuguese brewer Centralcer

The European Commission has cleared the acquisition by Britain's Scottish & Newcastle (S&N) of a 49 % stake in Centralcontrol which holds 100 % of Centralcer, Portugal's second brewer. The Commission concluded that the deal would not fundamentally change the situation of the Portuguese beer sector as S&N has only a marginal presence in the local wholesale market.

Through the operation Scottish & Newcastle will acquire joint control over Centralcer. The remaining 51 % will be held by VTR SGPS SA, a holding company for the interests of Banco Espirito Santo, Parfil, Fundaçao Bissaya Barreto, Olinveste and STDP.

The S&N group comprises brewing, wholesaling and beer retailing in the UK, Ireland, France and Belgium. Scottish & Newcastle beer brands include Courage, John Smiths, McEwan's, Newcastle Brown, Kronenbourg 1664, Kanterbrau, Maes and Cristal.

Centralcer is the n°2 Portuguese beer company with a market share of approximatively 38 % at the retail level. Its main brand is Sagres with a share around 34 %. Other brands include Topazio, Cergal and Golden.

Regarding brewing and retailing activities, there is no overlap between the parties. The only overlap identified by the parties is in the wholesale activity in Portugal.

The Portuguese beer market is a highly concentrated one, with two main players : Unicer with a 60 % market share and Centralcer. In July 2000, the Portuguese Competition Council issued a decision condemning both Unicer and Centralcer for anti-competitive practices regarding exclusive distribution contracts with wholesalers, namely abuse of economic dependence and resale price fixing.

The Commission's examination of the merger showed that the overlap between the activities of Centracel and S&N in the wholesale sector is minimal. S&N and subsidiary Danone currently supply only twelve wholesale customers in Portugal for the distribution of Kronenbourg beers, which account for less than 0.5 % of the Portuguese beer market.

Consequently, the Commission has concluded that the deal does not fundamentally change the current market situation and more importantly that it does not modify the incentive for Unicer and Centralcer to coordinate their behaviour.

This is the fourth concentration in the beer sector handled under the Merger Regulation in one year. Others are Scottish & Newcastle/Danone (France), Interbrew/Bass (UK) and Heineken/Cruzcampo (Spain)

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