Interbrew acquired Carling when it bought Bass for £2.3bn last year. It has since been mooted that Carling would be sold as a way of appeasing UK competition authorities.
Patricia Hewitt, the trade and industry secretary, has given the brewer until the end of February 2002 to dispose of either business to a buyer that is to be approved by the director general of fair trading (DGFT).
The decision follows a lengthy procedure after the former trade and industry secretary Stephen Byers blocked Interbrew's acquisition of Bass last year on competition grounds. The deal gave the Belgian company a 32% hold on the UK brewing market and Byers feared that the UK industry would be controlled by Interbrew and its rival Scottish & Newcastle.
Interbrew successfully challenged Byers' decision in the High Court and the government was forced to reassess the ruling. The DGFT was drafted in to consult Interbrew about how to rectify the situation.
Acting on the DGFT's advice, Hewitt ruled that Interbrew would be forced to dispose of either Carling or Bass, but that it would be allowed to choose which one would be least commercially damaging to let go.
Hewitt said, "I agree with the DGFT that, in the light of new information provided by Interbrew, two of the remedies on which he consulted could be capable of remedying the adverse effects identified by the competition commission, and that Interbrew is best placed to judge which of the two is least damaging to its commercial interests."
The DGFT investigated the possibility of Interbrew's disposal of the International Brewer or the Whitbread Brewing Company. However, the disposal of either of these was not sufficient to allay UK competition concerns.
If Interbrew decides to sell Carling, it is expected, according to recent reports, that Danish brewer Heineken would table a £1.2bn bid. Heineken is reported to want Carling to sit alongside its own brand which it wants to compete head to head with Interbrew's Stella Artois.
Interbrew also owns leading German brand Becks, which it successfully bid £2.1bn for in August.
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