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Wednesday, 21 February, 2001, 15:46 GMT
Belgium to sue UK over spilt beer
Bottles of beer on shop shelves
Belgium claims UK broke EU competition rules
Belgium will take the UK government to the European Court of Justice for blocking beer giant Interbrew's 2.3bn deal to buy Bass Brewers last year.

The Department of Trade and Industry (DTI) last month ordered the Belgian brewer to sell all of Bass' UK interests in one package.

The UK Trade Secretary, Stephen Byers, ruled that the combined Interbrew/Bass Brewers' 32% market share in the UK would give the group too much control in the sector.

Mr Byers decided such control could result in higher prices for consumers because it would create a duopoly with rival Scottish & Newcastle.

Analysts have speculated that job losses at a number of UK breweries might have also influenced the DTI decision.

Belgian troubles

The Belgian government will challenge the DTI ruling over "whether the European competition rules were properly respected".

"We will file a complaint in six weeks," said a spokesman for the Belgian Ministry of Economics.

European Court of Justice building
Were EU competition rules properly respected?
EU member states can only take measures to maintain or re-establish competition in the market.

Belgium believes the UK government has broken those rules by forcing Interbrew to sell all of Bass' UK interest, which makes up the heart of the company.

A DTI spokesperson said that the decision to block the merger was "taken correctly and in accordance with the relevant laws and procedures".

A preliminary ruling by the European Court of Justice could take 18 months.

Cheap beer

Interbrew said in January that it has made a provision of 1.2bn euros (761m) for the cost of the UK decision.

Mr Byers gave Interbrew six months to sell Bass within six months.

Bottles of SAB beer
SAB tipped to buy Bass
Analysts predict a forced sale within such short notice would allow buyers to bid well below the 2.3bn Interbrew paid for Bass.

Speculation about possible buyers for Bass centre on Dutch giant Heineken, Carlsberg-Tetley, the UK's number three brewer, and South African Breweries, which has itself been the subject of merger rumours.

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See also:

26 Jan 01 | Business
Interbrew challenges Bass ruling
05 Jan 01 | Business
Belgians bitter at Interbrew snub
04 Jan 01 | Business
Belgium slams blocking of Bass deal
01 Dec 00 | Business
Interbrew shares rise on debut
08 Nov 00 | Business
Interbrew to go public
03 Jan 01 | Business
Bass takeover blocked
03 Jan 01 | Business
What now for Bass beer brands?
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