Competition law Anti competitive activity – acquisitions – Competition Commission – procedural unfairness – duty to communicate factors influential to decision making

I, a Belgian public company which owned a number of major international beer brands, sought to challenge a decision of CC that its proposed acquisition of BB would be anti-competitive because it would create a duopoly between I and another major brewer, which was likely to operate against the public interest. Shortly before I agreed to buy BB, it had acquired W together with the licence to produce “Stella Artois”, a leading brand of premium lager, in the United Kingdom. CC had ordered I to divest itself of BB’s UK operations to a buyer approved by the Director of Fair Trading. I submitted that divestment of BB was a grossly disproportionate method of dealing with the anti-competitive consequences of the acquisition and that CC’s decision had been reached on the unfounded assumption that an alternative remedy, namely the divestment of W with “Stella Artois”, would not create an effective third player in the market. Held, granting the application, that there had been procedural unfairness during the decision making process. CC’s task had been to restore effective competition to the market by applying the least restrictive remedy. On the facts, CC had considered a number of options, but it had failed to raise with I at the hearings prior to the decision being made, the question of the viability of W as a competitor and licensor. That issue had played a vital part in CC’s determination, which I could not have been expected to know. CC did not have to adopt a two-stage procedure whereby it communicate a provisional finding to the parties concerned before pronouncing its definitive decision, but a failure to divulge its full reasoning and to give the parties an opportunity to make representations on the issues considered could, as in the instant case, render a decision void for unfairness.

“Current Law” November 2001