S&N faces battle for Courage

Scottish & Newcastle is facing an uphill battle to obtain clearance from the Department of Trade and Industry for its pounds 425m takeover of Courage. The deal would see S&N leapfrog Bass to become the market leader in the UK beer market.

A source said yesterday that directors from S&N and Courage had been referred back to the Office of Fair Trading by the DTI. Formal meetings are understood to have been held over the past week.

The source added that S&N may have to undertake certain conditions, such as disposing of at least one Courage brewery and cancelling supply agreements to some pub groups, before being allowed to proceed with the takeover.

Michael Foster, chairman of Courage, declined to comment on the situation, as did the DTI. Brian Stewart, chief executive of S&N, was in London for a meeting last night and unavailable for comment.

Other big and regional brewing groups have protested strongly to the OFT about S&N's bid. They have argued that S&N and Courage together would end up with a 30 per cent market share. S&N has insisted it would be bang on the benchmark of 25 per cent.

Bass and Whitbread, currently joint fourth largest brewers, are, according to industry sources, prepared to make big acquisitions should S&N be given the green light. Both are understood to be interested in buying Carlsberg- Tetley, the third largest brewer in the country.

Any restrictions placed on S&N's bid, however, would fly in the face of the competition policy outlined yesterday by Ian Lang, who succeeded Michael Heseltine as President of the Board of Trade in last week's Cabinet reshuffle.

Making his DTI debut before the press, Mr Lang said he believed in government "help" for business, but, drawing on a quotation from his predecessor, added: "If you ask me whether I will intervene before breakfast, lunch and dinner - the answer is no. I do not believe in intervention as such. We are not an interventionist Government."

Mr Lang said that much stronger focus will be given in future to nurturing small firms. "This is the area where future potential growth in employment lies. If we need to put more resources in that direction then we shall find them," he said.

The ministerial team at the DTI has been expanded from seven to eight, reflecting new responsibilities for science and technology and for some aspects of employment.

Mr Lang was flanked by Lord Fraser of Carmyllie, the DTI spokesman in the House of Lords, and by Tim Eggar, who retains his role as minister for industry and energy. The team also includes: Anthony Nelson, as minister for trade, Philip Oppenheim, minister for company affairs; Jonathan Evans, minister for competition and consumer affairs and Richard Page as minister for small business.