Another monopoly is not the answer

Do not forsake the glorious Reds, and the forgiving family that worships you, by defecting to Inter Milan just because of some little local difficulties, begs a desperate fan

It's official. After months of speculation, Scottish & Newcastle has been forced to admit it is negotiating to buy Courage fromFoster's. This is a deal, however, that has seen so many false dawns that it is hard to believe the sun is finally rising. The combination of S&N and Courage will breach the 25 per cent share of the market that technically makes it a monopoly.

For the government to allow the formation of the mother of all brewers is, surely, out of the question, even if one accepts the argument that concentration is needed in an industry which is awash with over-capacity at a time of falling demand. Change there almost certainly will have to be. But the form of Courage's dismemberment will be complex and may well involve several other parties.

The financial arrangements S & N will have to put in place seem almost peripheral set against the other issues involved. These include the unravelling of Courage's half share in Inntrepreneur, the 4,350 strong pub chain owned with Grand Metropolitan, and numerous beer production agreements with the likes of Anheuser Busch, Holsten and even Foster's itself. Inntrepreneur, which is tied to Courage for the next three years, is unquestionably the most contentious issue. The pub company is at the centre of the Office of Fair Trading's recently launched investigation into beer supply prices

This is a deal which is clearly going to be of enormous benefit to S&N, and, if it succeeds in reducing capacity, to the industry as a whole. Finding a way to complete it that will also meet regulatory concerns is another matter.