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Morning Briefing for pub, restaurant and food wervice operators

Mon 11th May 2015 - CMA finds Greene King/Spirit merger raises competition issues in 16 places
CMA finds Greene King/Spirit merger raises competition issues in 16 places: The anticipated acquisition by Greene King of Spirit Pub Company will be referred for an in-depth investigation unless acceptable undertakings are offered, the Competition and Mergers Authority (CMA) has ruled. The CMA stated: “Greene King runs approximately 1,900 pubs, restaurants and a small number of hotels in the UK. Its brands include Eating Inn, Farmhouse Inns, Flame Grill, Hungry Horse, Meet & Eat, Old English Inns, Metropolitan Pub Company and Loch Fyne Seafood and Grill. Greene King also has brewing activities and supplies ale to internal customers and other pub operators. Spirit Pub Company (runs approximately 1,200 pubs across the UK and its brands include Chef & Brewer, Fayre & Square (also incorporating Wacky Warehouse), Flaming Grill, Golden Oak Inns, Good Night Inns, John Barras, and Taylor Walker. The Competition and Markets Authority’s (CMA) initial investigation found that around 1,000 Spirit pubs overlap with a Greene King pub in a local area. In the vast majority of these areas, the CMA does not have any competition concerns given the many alternative pubs offering similar eating and drinking options. However in a small number of areas, the CMA found that the parties’ pubs were in close proximity, were each other’s key rivals and did not face sufficient competition from other outlets, meaning that the loss of that competition may lead to an increase in prices or a deterioration in the quality of the offering. As such, the CMA, at this first phase, has found that the transaction gives rise to a realistic prospect of a substantial lessening of competition in 16 local areas. The transaction will therefore be referred for an in-depth phase 2 investigation unless Greene King and Spirit offer acceptable undertakings to address the CMA’s competition concerns in a clear-cut manner.” Sheldon Mills, CMA senior director of mergers and decision maker in this case, said: “Greene King and Spirit together operate over 3,000 pubs and restaurants across the UK, offering customers a wide range of eating and drinking choices under some well-known brands. Overall, we did not find major concerns with this transaction, given that most of the parties’ pubs face local competition from national pub chains or independent rivals. In a small number of areas, we found that after the merger the parties would operate pubs in close proximity without facing sufficient competition from rivals and we are concerned this could lead to a rise in the price of food or drink or a reduction in the quality of those pubs. Greene King and Spirit now have the opportunity to resolve these concerns by offering appropriate undertakings.” Greene King and Spirit Pub Company have until 18 May to offer an undertaking to the CMA that might be accepted by the CMA under section 73(2) of the Act. If no such undertaking is offered, then the CMA will refer this merger pursuant to sections 33(1) and 34ZA(2) of the Act.


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