Affected market: Pubs
Full text of the decision:
Undertakings in lieu of reference:
Undertakings acceptance decision
The OFT's decision on reference under section 22 given on 6 October
Greene King plc (Greene King) is an integrated brewer, beer
distributor and pub company.
Laurel Pub Holdings Limited (Laurel) was a subsidiary of The Laurel
Pub Company Limited, which in turn is owned by Morgan Grenfell Private
Equity Limited. Laurel was a vehicle to enable the transfer of the 432
pubs that constitute the Neighbourhood division of The Laurel Pub
Company Limited. The UK turnover attributable to Laurel for the year
ended 29 February 2004 has been calculated as £235.4m.
Greene King has acquired Laurel. The parties notified the transaction to
the OFT by a merger notice submitted on 9 July 2004. The parties
withdrew the merger notice and the transaction completed on 6 August
As a result of this transaction Greene King and Laurel have ceased to be
distinct. The UK turnover of Laurel exceeds £70 million, so the turnover
test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is
satisfied. A relevant merger situation has been created.
By way of a decision of 9 August 2004 (the 'Decision') the OFT
announced that, on the evidence available to it, the OFT believed that
it may be the case that the merger may be expected to result in a
substantial lessening of competition in the operation of pubs in seven
petty sessional division (PSDs). For the reasons set out in the
Decision, the OFT was concerned that the acquisition by Greene King of a
number of pubs in these seven PSDs would create or increase a combined
share of suppy of 25 per cent, such that the merger may give rise to
less competition at the local level to offer customers value for money.
A copy of the Decision is attached at
On this basis, the OFT decided that the merger would be referred to the
Competition Commission unless Greene King gave suitable undertakings
pursuant to section 73 of the Enterprise Act to address the competition
concerns arising from the merger.
Greene King offered to give undertakings to divest 13 pubs in seven PSDs
to a purchaser or purchasers to be approved by the OFT.
On 27 August 2004, the OFT published the proposed undertakings inviting
interested parties to give their views on them to the OFT. The OFT did
not receive any responses to suggest that the proposed undertakings were
not appropriate to remedy, mitigate or prevent the competition concerns
The merger would have been referred to the Competition Commission if
Greene King had failed to give suitable undertakings pursuant to section
73 of the Act to address the competition concern outlined above. The OFT
has decided to accept the proposed undertakings in lieu of reference as
they address that competition concern.
This merger will therefore not be referred to the Competition Commission
and the undertakings which have been signed by Greene King, a copy of
which is attached at
of this decision, will come into effect from this date.