Heineken and Anheuser-Busch InBev squared off again at a Competition Tribunal hearing yesterday into the Dutch group's proposed R40bn merger with Distell as competition economists argued for and against the sale of the Strongbow brand as a condition of the deal.

A Fin24 report says AB InBev and its local unit, SA Breweries (SAB), want the two parties to dispose of Distell's Hunter's or Savanna brands, rather than Heineken's Strongbow, as agreed to with competition authorities, arguing this would be far better for competition.

However, Heineken and Distell claim this is not the case, arguing that AB InBev and SAB are trying to use the transaction to force them to sell Hunter's or Savanna.

Heineken and Distell's expert witness, Patrick Smith, an independent economist and partner at RBB Economics, said yesterday Heineken's disposal of the Strongbow brand more than met the requirement that the transaction should ensure that the competitive landscape is as close to what it was at the close of the transaction.

He said the sale of Heineken's licence for Strongbow in SA removed any overlap between Heineken and Distell, which owns local brands Hunter's and Savanna.

However, independent economist and Genesis Analytics founder Stephan Malherbe, the witness for AB InBev and SAB, said the case made by Smith that any overlap between Heineken and Distell was removed by the disposal of Strongbow did not hold true in practice.

He also said that ‘alarm bells should be going off’ as any Strongbow disposal would be a ‘partial divestiture’ as it only involved the sale of its licence in SA and not the actual business or any of its facilities.

And as Hunter's and Savanna were the ‘crown jewels’ of the proposed merger transaction, Heineken had no ‘incentive to support Strongbow with the latest innovations’.

Full Fin24 report