F&N won't enforce clause on Heineken competition

PHOTO: F&N won't enforce clause on Heineken competition

Fraser & Neave has agreed not to enforce an agreement that would have prevented beer giant Heineken from entering Singapore's soft drinks market within the next year.

There has been no suggestion from the Dutch brewer that it is considering making or selling soft drinks in Singapore, so the F&N move on Monday may be inconsequential in a business sense. Heineken focuses on beer, and has not been known to have a soft drinks business.

What the move does do is nullify the non-compete clause F&N made when Heineken bought out its 50 per cent stake in Asia Pacific Investment last year.

The Competition Commission of Singapore (CCS) began investigating the clause in January and started talks with F&N about it.

The deal was that Heineken would not make, distribute or sell soft drinks for two years from the completion of the acquisition. That cut-off point was Nov 14 next year.

However, F&N said it had offered a voluntary undertaking to the CCS not to enforce the non-compete clause with respect to Singapore. The clause is still enforceable outside Singapore.

"The voluntary undertaking was mutually agreed with the CCS and entered into without any finding of liability by the CCS or any admission of liability by the company," F&N said.

F&N said it was unaware of any plans by Heineken to carry out any soft drinks activity in Singapore. It had also taken into account the time and resources it would have to spend on further discussions with the CCS.

Corporate lawyer Robson Lee said F&N's board probably felt that, on balance, it was best for the company and its shareholders not to enforce the clause.

"In my view it would help, in a way, to resolve the issues being investigated, but obviously the underlying reason must be that the board considered it in F&N's best interest, taking into account the wider interest of the public and the interest of its shareholders."

The CCS said on Monday that it has stopped its investigation, given the F&N decision.

yasminey@sph.com.sg


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