CARLSBERG and Heineken are at the centre of concerns over corporate behaviour after an MP threw recent price-fixing scandals into the bid battle for Scottish & Newcastle.
In April, Heineken was fined along with Grolsch and Bavaria by the European Commission for price fixing and operating a cartel in the beer market in the Netherlands. John Grogan, MP for Selby in North Yorkshire, has called on Heineken to issue assura
nces that it will not repeat such behaviour in Britain.
Neelie Kroes, European commissioner for agricultural policy, said the brewers tried to cover their tracks by using code names and abbreviations for secret meetings as they carved up the Dutch market for beer sold to supermarkets, hotels, restaurants and cafés. The price fixing even extended to cheaper own-brand labels and rebates for bars.
The commissioner concluded that she was "very disappointed to learn from our investigation into this case that the management of these companies at the very highest levels participated in this cartel actively despite knowing that this behaviour was illegal".
Grogan, writing in trade publication the Morning Advertiser, said: "In the United States such behaviour can lead to business executives being jailed and Heineken needs, at the very least, to give assurances as to why they would behave differently in Britain."
Separately, Carlsberg is also under the microscope. Deputy chairman Jens Bigum, who is regarded as driving the bid for S&N, was managing director of Arla Foods when it was involved in a dairy price-fixing inquiry.
A spokeswoman for the Danish-Dutch consortium said: "Arla Foods is a separate issue for another company and we couldn't comment on that.
"In April 2007, the European Commission fined Heineken, along with several other brewers, following a seven-year investigation into events that were said to have occurred 12 to 15 years ago.
"Heineken said at the time that they found the fine unjustified and excessive. In June, once Heineken had had an opportunity to study the full ruling, it said that it would appeal. The company are unable to comment further given that a legal process is under way and is not expected to be resolved for the next three to four years."
The markets are awaiting the next move by the consortium, with some forecasting a revised offer of 775p a share - an increase on the 750p bid that values S&N at £7.3bn.
Some believe Carlsberg, which is steering the bid, may walk away rather than go hostile, which is not thought to suit the Heineken board. It is also thought that the Danish company will struggle to raise the cash for a higher offer which would probably entail the second biggest rights issue in Europe that would be half Carlsberg's market capitalisation.
Meanwhile, SAB Miller and Anheuser Busch are watching developments.
The full article contains 481 words and appears in Scotland On Sunday newspaper.
