Whitbread sale opposed

PUNCH TAVERNS will urge the Office of Fair Trading this week to block the disposal of Whitbread's breweries.

The move, backed by other pub owners concerned about the increasing concentration of brewing interests, is the latest in the bitter pounds 2.6bn battle for control of Allied Domecq's pub estate .

Whitbread has so far received five expressions of interest for the breweries in Gwent, Manchester and Preston. But Hugh Osmond, who runs privately owned Punch, believes that Whitbread's plan would concentrate Britain's brewing capacity in too few hands. Punch has joined forces with other pub companies in voicing concern that the remaining brewers would have the power to restrict choice by dictating supply terms to their customers.

Whitbread is obliged by the 1989 Beer Orders to dispose of its three breweries if its purchase of Allied's 3,600-strong estate is to get the go-ahead. The Orders, which sought to limit the power of big brewers, restricts the number of pubs that the likes of Whitbread are allowed to own if they continue brewing.

The Orders came into force when Britain's beer market was controlled by six brewers. However, the ranks of dominant brewers could dwindle to number only Scottish & Newcastle, Bass and Carlsberg-Tetley after Whitbread's exit. The breweries are responsible for the Bodington's, Heineken and Stella Artois brands.

Mr Osmond is concerned that Whitbread will have to put in place a restrictive supply agreement with its pubs to ensure that the breweries remain viable, in apparent contravention of the Beer Orders.

The opposition of Mr Osmond and others echoes criticism by the Campaign for Real Ale of Whitbread's agreement to buy the pubs, which will leave Allied free to develop its spirits business.

Mr Osmond's submission to the OFT will form part of a concerted attack on Whitbread as Punch finalises its bid for the Allied estate. He has been an outspoken critic of the agreement with Whitbread, which came after Allied rebuffed his own attempts to buy the pubs.

Mr Osmond has now obtained a copy of the Carlsberg-Tetley supply agreement, which is considered critical to determining the value of the Allied estate. Another potential obstacle to a Punch bid, the capital gains tax liability of a cash bid for the pubs, appears to have been removed after Goldman Sachs, the investment bank advising Allied, said it was satisfied with Punch's tax arrangements.