16 November, 2005

Australia : Australian Competition and Consumer Commission announces preliminary findings on Lion Nathan's bid for Coopers

The Australian Competition and Consumer Commission is seeking more detail on whether Lion Nathan Ltd.'s A$352 million ($257 million) bid for Coopers Brewery Ltd. would hurt beer distribution and remove a key competitor, Reuters reported on November 16.

The Australian Competition and Consumer Commission said it wanted further submissions by Friday next week and would announce a decision in December on Lion Nathan's bid for the South Australian brewer. The ACCC said preliminary inquiries had suggested that the takeover of Coopers could raise barriers to entry into the Australian beer market by removing an independent distributor.

It said inquiries also suggested that Coopers had an influence on pricing by Lion Nathan and its major rival Foster's Group Ltd. , and influenced beer product innovation, marketing and advertising. "More generally, market inquiries suggested that Lion Nathan was seeking to acquire Coopers to neutralise a growing and potentially significant brewer," it said.

But the ACCC said it had also been suggested that rivalry between Lion Nathan and the Foster's beer unit had a much more significant impact on competition than its rivalry with Coopers.

"The ACCC seeks further information on whether Coopers is a vigorous and effective competitor in the relevant market, particularly as regards the pricing, quality and range of beer products available to consumers," it said.
Lion Nathan has offered A$260 a share for the unlisted brewer, whose brands include Coopers Original Pale Ale and Coopers Sparkling Ale.

Coopers says it has a 3.2 percent share of the national beer market, a 22.9 percent share in its home South Australian market and a 12 percent share of the highly-sought premium end of the beer market. The ACCC said it viewed the relevant market for its inquiry as the national Australian beer market, putting to rest some speculation that it could focus on concentration in South Australia.
"We are delighted that it appears the ACCC have decided that it is a national market," a Lion Nathan spokesman said. "We look forward to the full judgement in due course and remain confident."

Coopers Executive Chairman Glenn Cooper said in a statement he believed the ACCC's comments raised significant questions about Lion Nathan's bid.

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