competition policy and the legitimacy of finance: evidence ... · evolution of the uk brewing...
TRANSCRIPT
1
Competition policy and the legitimacy of finance: evidence from the deregulation of the
UK brewing industry
Dr Julie Bower
Birmingham Business School, University of Birmingham
Traditionally the UK brewing model was one that incorporated vertical ownership and control
of public houses (pubs). The political affiliation of the leading firms and their powerful
lobbying interests were sufficient to thwart not just capital market interest but the public
interest objectives of an emerging competition policy regime. Even the 1980s ‘merger wave’
that prompted a return to corporate specialization left the industry largely unchanged.
However, influence over policy came to an abrupt and controversial end in 1989 in the forced
divestment of the major brewers’ pub estates. Financiers seized the opportunity presented by
the change in competition policy. In less than a decade the pub industry was the subject of
‘financialization’ with control migrating to independent firms, the ‘PubCos’, which were
backed, and in some cases operated, by financial services intermediaries. The sustainability of
this business model was questioned by the 2008 Financial Crisis, with several prominent
PubCos struggling to survive and with no obvious exit route for their financial backers. In
presenting this historical case study I draw attention to the interplay between competition
policy and financialization, the latter of which derives legitimacy and is underpinned more
generally by other features of the institutional environment.
INTRODUCTION
For nearly two centuries the UK brewing industry evolved with a vertically-integrated
structure. In eighteenth century London brewers sought to control the retail distribution of
beer as licences became restricted (Gourvish and Wilson, 1994). With subsequent licencing
changes in the late nineteenth century, brewers in other parts of the UK acquired chains of
pub estates which were largely operated by third-party tenants to control the distribution of
their brewery production (Mutch, 2006). The attractions of distributing beer to a narrow
regional area with some form of exclusivity are clear from a comparative historic study of
returns on capital for selected UK brewer-retailers (Higgins and Toms, 2011).
That the industry survived into the 1990s with this structure even though an anti-trust
inquiry in 1969 had identified that it might operate against the public interest, was due largely
to the political voice of what was known as ‘The Beerage’ (‘beer’ plus ‘peerage’) of wealthy
family firms that controlled the industry (Bower and Cox, 2012). Moreover, in the post-World
War II era when the market for corporate control was emerging, a Bank of England that
signalled publicly its disapproval of debt-funded hostile bids offered general support to
traditional firms and industries (Roberts, 1992). Hostile approaches by prominent financiers
and outsiders such as property entrepreneur Charles Clore served to precipitate defensive
industry consolidation in the early 1960s. The creation of what were known as the ‘Big 6’
national brewer-retailers - Allied-Lyons, Bass, Courage, Scottish & Newcastle, Watney Mann
and Whitbread – led to wider concerns about market abuse which prompted competition
policy intervention (Spicer, Thurman, Walters and Ward, 2012). Where the 1969 inquiry
failed to force change, the 1989 inquiry, coinciding with an agenda of deregulation under
Conservative Prime Minister Mrs Thatcher, led to the dismantling of vertical integration of
2
large scale brewing into its constituent production and pub retailing operations. In little over a
decade, financial intermediaries acquired, restructured and came to dominate the operation of
the downstream public house assets of the UK with the approval of regulatory policy.
In reflecting on this subsequent period of the ‘financialization’ of the pub industry
newspaper commentary of international brewer Heineken’s decision to acquire UK pub assets
informs a wider debate on the role of finance in all aspects of corporate and economic
activity: “How on earth did Royal Bank of Scotland become one of Britain's biggest pub
landlords? The answer, of course, can be found in the era when retail banks thought banking
meant whatever they wanted it to mean” (The Guardian, 2 December 2011). The UK state-
owned Royal Bank of Scotland had been the owner of a portfolio of former Scottish &
Newcastle pubs since the early 2000s. In 2011, as several of the other financially-structured
pub models of the late 1990s and 2000s were struggling to survive in the aftermath of the
2008 Financial Crisis, it appeared that the mainstream retail banks might become
unintentional owners of many pub chains on the cusp of bankruptcy. In re-integrating the
former Scottish & Newcastle pub estate with the UK brewing operations it bought in 2007,
the Heineken decision identified a possible exit route for the financialized pub model -
perhaps ironic given the forced separation of industry assets through the 1989 ‘Beer Orders’.
My case study seeks to develop a deeper theoretical understanding of the interaction
between competition policy and financialization as two key elements of the institutional
environment that shape industry structure and operation. My empirical study describes the
evolution of the UK brewing industry through a competition policy-mandated change that
made way for the new business models created and held together, at least initially, by
financialization. Although this industry is somewhat unique in the culture and history of the
UK, the processes it illuminates are of wider relevance in developing a deeper understanding
of the organization and evolution of other industries as some researchers contemplate
financialization of US corporations as a potential threat to economic growth (Lazonick, 2010).
THEORETICAL BACKGROUND
Regulation and the capital markets represent two important points of interaction between
firms and the institutional environment within which they operate. The tensions and
constraining effect of each on firm behaviour and actions is well understood in both
theoretical and practical terms. For example, in implementing a growth strategy relying on
mergers and acquisitions, firms are charged with the dual task of persuading the competition
authorities of the merits of their case - ideally without recourse to a formal investigation – and
encouraging the financial support of bankers and shareholders. It is clear that the process of
discussion and negotiation with these institutional agents requires both powerful words and
actions; the extensive media campaigns, investor road shows and expert advisory support that
accompanies each major acquisition.
The management literature recognises the key role of the institutional environment as
a collective entity in shaping what firms do (Peng, Sun, Pinkham and Chen, 2009) in
particular in influencing structure and behaviour (Child and Rodrigues, 2011; Kostova, Roth
and Dacin, 2008) and researchers have noted the importance of firm interactions with the
competition framework of government (Barney, 2001; Shaffer, 1995; Shaffer and Hillman,
2000) as part of the process of aligning corporate strategies to the wider political context
(Oliver and Holzinger, 2008). Yet despite this evolving institutional literature that also
encompasses co-evolutionary studies of power and politics in the strategic behaviour of firms
(Child, Rodrigues and Tse, 2012) studies of competition policy in action are rare (Peng et al,
3
2009) despite frequent calls for empirical analysis to further the understanding of the
evolution of industrial architecture and firm boundaries (Jacobides and Winter, 2012).
In the following sections I draw attention to theoretical debates in related literature to
expand on the hypothesis that regulation and competition policy is significant in legitimizing
the role of capital market activity in inducing the changes evident in the UK brewing industry.
Further, without change in regulation it is unlikely that financialization would find support. In
considering broader historic debate it is clear that these two aspects of the institutional
environment need to be considered in tandem in discussions of firm and industry structure.
The constraining effect of US competition policy contributed to a thirty year post-World War
II trend which saw the proliferation of diversified industrial conglomerates (Shleifer and
Vishny, 1991). This owed much to the aggressive anti-trust oversight of horizontal mergers
and the centrality of econometric modelling of mergers following the 1957 Du Pont
monopolization case (Massey, 2000; Winerman, 2003). Although the conglomerate form
emerged in the UK in this era, with the absence of a merger regulation in competition policy
until 1965, restrictions on the distribution of capital, tax credits and capital controls led to the
over-accumulation of capital within larger firms, which, absent a fully functioning market for
corporate control underpinned a programme of unrelated diversification in the 1960s and
1970s (Roberts, 1992; Rowlinson, Toms and Wilson, 2007).
The central objective of competition policy is to ensure that consumers do not suffer
as a result of an array of anti-competitive practices by dominant firms with policy makers
retaining the ultimate sanction of forcing the separation of assets and defining the boundaries
of the firm (Joskow, 2002). The fact that regulation might not be an efficient or effective
mechanism to control management practices has been the subject of significant academic
enquiry in regulatory economics and the political economy literature.
The concept of ‘regulatory capture’ explains the behavior of interest groups in
influencing public decision makers through corruption and manipulation at the extreme, to the
mere eagerness to please private interests through the course of their repeated interactions
(Dal Bó, 2006; Laffont and Tirole, 1991; Martimort, 1999). The more benign concept of
intellectual capture is a manifestation of the power of words in the persuasive argument of
firms incentivized as rational profit maximizers to ‘game’ the regulator. Although largely the
domain of regulated utility-type industries, empirical studies have, however, identified
political interference and forms of regulatory capture in the less frequent competition and
merger policy process in both the US (Coate, Higgins, and McChesney, 1990), and Europe
(Aktas, de Bodt, and Roll, 2007).
Although broadly defined in the finance and economics literature, financialization
explains the trends of the past thirty years whereby finance and financial institutions have
come to directly and indirectly influence the behaviour of firms in areas such as capital
structure, dividend policy and fixed asset investment strategies (Orhangazi, 2008; Skott and
Ryoo, 2008; Stockhammer, 2004) or the evaluation of the performance of a firm by a
financial measure such as earnings per share (Lazonick, 2010). It is more specifically
associated with the liberalization of the capital markets in the US and the UK where financial
intermediaries, including activist investors, hedge funds and private equity firms have
emerged and been active in precipitating structural change in particular firms and industries,
aided by a process known as ‘securitization’ (Girόn and Chapoy, 2012)1. Securitization took
1 This is a financial innovation whereby contractual debt obligations, such as mortgages and car loans are pooled
and packaged into capital market stocks and shares. Those backed by mortgage payments are called Mortgage-
Backed Securities (MBS) and those backed by other types of payments are called Asset-Backed Securities
(ABS). Particular types of ABS, known as a Collateralized Debt Obligations (CDO) that originated in the
4
financialization one step further in that it established different ways that participants, many of
whom had no prior expertise as either managers of the underlying assets or who were
otherwise new entrants to the capital markets could monetise the benefits from the debt
markets (Jacobides and Winter, 2012).
The political economy literature broadens the concept of financialization to explain
the structural transformation of capitalist economies at the expense of broader social
implications (Becker, Jäger and Leubolt, 2012; Lapavitsas, 2011). The management literature
has investigated in some detail the human resource cost of financialization in the practices of
private equity group ownership, where, for example, the elimination of staff training and
investment has underpinned the value-based control systems that tie manager interests to
those of shareholders (Clark, 2009; Fiss and Zajac, 2004).
With regard to timeline, financialization is normally anchored in the 1980s ‘merger
wave’ of hostile bids which were fuelled by financial innovation in the deregulated US and
UK capital markets (Bhagat, Shleifer and Vishny, 1990). It was from this base that the so-
called shareholder revolution of the 1990s emerged (Orhangazi, 2008, P 864). In this context
financialization is usually considered to have a sole purpose of securing windfalls to financial
intermediaries, of which private equity funds have become the most prominent protagonists
(Wood and Wright, 2010). Contemporary media debate centres on the over-riding control of
the financial system in these liberal economies manifest in a permanent restructuring of
economic activity. An historic analogy is with the role adopted by the new manager
entrepreneur elites that emerged in the 1920s and 1930s (Folkman, Froud, Johal and
Williams, 2007).
The historic analogy is relevant as a theoretical extension of financialization is
anchored more firmly in the organization structures and the relationship with competition
policy that emerged as the market for corporate control was in its infancy (Hannah, 2007).
The 1948 Companies Acts mandated more stringent financial disclosure requirements for
listed firms so that external (institutional) shareholders could gain detailed financial
information about the firms in which they invested (Roberts, 1992; Toms and Wright, 2002).
It was these legislative changes that highlighted to financial entrepreneurs valuation
mismatches of listed property portfolios (Bower and Cox, 2012). Although the capital
restrictions that still remained, in addition to domestic-oriented banking activity tended to
provide a limited restraining influence on managements as agents of independent shareholders
(Jensen and Meckling, 1976), mergers and acquisitions activity, including hostile bids did
occur as a process of intra-industry rationalization of production costs (Bhagat, Shleifer and
Vishny, 1990; Franks and Mayer, 1996).
It was not until the 1980s that many of these conglomerate structures were dismantled
in a return to corporate specialization, supported by deregulation of capital market activities
(Porter, 1996). Political influence and lobbying to direct regulatory policy did not dissipate
entirely, in particular, when mergers involved hostile foreigners; US lawyers Herzel and
Shepro (1990) recounted the $21bn hostile bid from UK financiers, Sir James Goldsmith and
Lord Rothschild for British American Tobacco which saw 200 members of the US Congress
sign a letter urging the US State Department to block the deal. But in general, with policy
moving in the direction of structural independence from the political system, the ‘public
interest’ defence in competition policy which had tended to keep financialization at bay (in
particular in the UK) and in so doing, was laying the foundation for finance-backed business
models in their own right.
corporate debt markets in the 1980s in conjunction with the leveraged buyout phenomenon, are relevant to this
case. These financial instruments are integral in the evolution of the 2008 Financial Crisis.
5
In the 1990s there was an active debate in the role of the capital markets in policing
firm behaviour, as some notable protagonists of principle-agent theory such as Michael
Jensen (Jensen and Meckling, 1976) considered that higher leverage was the best discipline in
the Anglo-American divorced ownership model (Shleifer and Vishny, 1997). This was in
stark contrast to the attraction – at least in national outcome terms – of the German model of
ownership and control. In Germany major banks were more deeply embedded in the industrial
base with supervisory roles on the boards of major German firms, supported by large equity
investments that protected firms from wider capital market scrutiny (Fiss and Zajac, 2004).
The downside of the Anglo-American model was seen in the experiences of the irrationally
exuberant2 Dotcom era, of 1995-2000. Some firms, such as Enron, were seen as gaining more
from the capital markets than from operating productively in their industry (Froud, Johal,
Papazian and Williams, 2004). The exposition of the Enron business model informs a debate
on the financialization of the energy industry, as well as the now infamous illegal corporate
activity. Yet its very existence and survival owed much to the hyped investment environment
that emerged and thrived in that era.
DATA AND METHODOLOGY
I seek by means of a detailed longitudinal case study to develop the theory of financialization
as a process that emerges in conjunction with an interaction with competition policy. It
follows the academic tradition of using case studies to enhance existing theories (Bansal and
Corley, 2011; Doz, 2011; Eisenhardt and Graebner, 2007) notwithstanding the usual pitfalls
of the methodology, namely subjectivity and lack of generalisability. However, given the
complexity and time-dependency of the process involved this approach is considered optimal
in seeking to develop complex phenomena such as path-dependency (Siggelkow, 2007;
Sydow, Schreyögg and Koch, 2009) and interactions between firms and their institutional
environment (Lewin and Volberda, 1999; Peng et al, 2009). This is in contrast to the more
familiar cross-section statistical analysis that underpins much of the academic debate in both
regulation of markets and in studies seeking to understand the role of financial services in
industrial architecture.
The case study utilizes data and information collected and analysed from multiple
sources, including firm archive and official regulatory documentation, some of which has
only recent been made generally available through the National Archive and the London
Metropolitan Archive. The availability of extensive official and archive information in the
UK brewing and pub retailing industry is a reflection of its historic and continuing importance
to aspects of UK society and its juxtaposition in the political infrastructure of the UK. This
relates directly to the formulation and implementation of important anti-trust and merger
policy decisions. Consequently as an industry study it presents a unique dataset from which to
interpret important constructs such as political behaviour and institutional interactions (Child,
Rodrigues and Tse, 2012).
Table I below lists the main official documentary evidence that I have interrogated to
inform the study. It incorporates the data and information from anti-trust and merger inquiry
reports and specific listing particulars from the firms, firm annual reports, data and
information from the British Beer & Pub Association as well as various UK Parliamentary
discussions as shown.
2 A reference to comments made by Federal Reserve Board Chairman, Alan Greenspan, in a speech to the
American Enterprise Institute in 1996
6
TABLE 1: Secondary Data Source Material
Year Document Type Document Title
1969 MMC Inquiry Beer: A Report on the Supply of Beer (HC 216)
1985 MMC Inquiry
Scottish & Newcastle Breweries PLC and Matthew Brown PLC: A Report on the Proposed
Merger (Cmnd 9645)
1986 MMC Inquiry Elders IXL Ltd and Allied-Lyons PLC: A Report on the Proposed Merger (Cmnd 9892)
1988 Defence Document Scottish & Newcastle Breweries – Reject the Inadequate Elders Offers *
1989 MMC Inquiry The Supply of Beer: A Report on the Supply of Beer for Retail Sale in the United Kingdom
(Cm 651)
1989 MMC Inquiry Elders IXL and Scottish & Newcastle Breweries PLC: A Report on the Merger Situations
(Cm 654)
1989 Press Notice Decision on Beer Orders, DTI (89/745) **
1989 EC Official Journal Merger Regulation (4064/89)
1990 MMC Inquiry Elders IXL Ltd and Grand Metropolitan PLC: A Report on the Merger Situations (Cm 1227)
1992 MMC Inquiry Allied-Lyons PLC and Carlsberg A/S: A Report on the Proposed Joint Venture (Cm 2029)
1995 Listing Particulars Scottish & Newcastle PLC Proposed Acquisition of the Courage Business and Rights Issue *
1997 MMC Inquiry Bass PLC, Carlsberg A/S and Carlsberg-Tetley PLC: A Report on the Merger Situation (Cm
3662)
1997 Press Notice Margaret Beckett Blocks Bass/Carlsberg-Tetley Merger, DTI (97/424) **
1997 EC Official Journal Notice on the Definition of Relevant Market for the Purposes of Community Competition
Law (97/C 372/03)
1999 Press Notice Stephen Byers Refers Whitbread PLC’s Proposed Acquisition of Allied Domecq Retailing to
the Competition Commission, DTI
2000 OFT Report The Supply of Beer: A Report on the Review of the Beer Orders by the Former DGFT (OFT
317)
2001 CC Inquiry Interbrew SA and Bass PLC: A Report on the Acquisition by Interbrew SA of the Brewing
Interests of Bass PLC (Cm 5014)
2001 OFT Report Advice on the Report by the Competition Commission into the Acquisition by Interbrew SA
of the Brewing Interests of Bass PLC
2003 Listing Particulars Proposed sale by Scottish & Newcastle PLC of S&N Retail *
2004 EC Report Merger Regulation (139/04)
2009 House of Commons
Report
Pub Companies; Seventh Report of Session 2008-09 (Oral and Written Evidence to Business
and Enterprise Committee)
2009 House of Commons
Report
Pub Companies; Seventh Report of Session 2008-09 (Report and Formal Minutes of Business
and Enterprise Committee)
2009 IFBB Report European Commission: Review of the Competition Rules Applicable to Vertical Agreements
(Submission from The Independent Family Brewers of Britain)
2009 CAMRA Report European Commission: Review of the Competition Rules Applicable to Vertical Agreements
(A Response from the Campaign for Real Ale)
2009 OFT Report Response to CAMRA’s Super-complaint (OFT 1137)
2010 OFT Report CAMRA Super-complaint – OFT Final Decision (OFT 1279)
* Documents provided by Scottish & Newcastle from firm archive
**Documents available from UK Department for Business, Innovation & Skills (formerly Department of Trade and Industry)
archive.
All other documents available to download from official websites
The timeframe for the study is a period of considerable upheaval as the centuries-old UK
vertical brewing structure was dismantled. New entrants, largely finance-backed special
purpose independent public house companies, known as the PubCos, gradually came to
dominate the ownership of the industry’s property assets. Consequently, the industry has
informed academic debates in various business and management-related literatures in
particular in regulatory economics (Nalebuff, 2003; Pinkse and Slade, 2004; Slade, 2011) and
in UK economic and business history (Gourvish and Wilson, 1994; Higgins and Toms, 2011;
Mutch, 2006, 2010; Spicer, Thurman, Walters and Ward, 2012). As a closed-system industry,
its interest to strategic management lies in both the transformation of the ‘Big 6’ brewer-
7
retailer firms from vertically-integrated regional operators to international brewers and spirits
marketers (da Silva Lopes, 2002; Geppert, Dӧrrenbächer, Gammelgaard and Taplin, 2013).
Two anti-trust inquiries (in 1969 and 1989) and several controversial mergers of the 1980s
(Australian conglomerate Elders IXL’s hostile bids for Allied-Lyons and Scottish &
Newcastle and the Guinness/Distillers affair) widened the industry’s appeal to a series of
business and political discussions (Bower and Cox, 2012). Yet the system that had found
political support through many different Governments, aided by political donations and high-
level lobbying was broken apart by a competition policy-mandated change, paving the way
for a change of ownership and control from brewing firms to finance-backed entities, as
discussed is the following sections and summarised in Table 2 below.
DISMANTLING THE UK BREWING INDUSTRY
Traditionally, the UK brewing industry was vertically-integrated, with brewers owning
outright or controlling through a tenant-supply relationship known as a ‘property tie’ the
greater proportion of the UK’s public houses3. In the latter part of the eighteenth century
London brewers sought increasingly to control the retail distribution of beer as licences
became restricted with around half of London’s pubs owned or controlled by brewers by the
1830s (Gourvish and Wilson, 1994: p128). With subsequent licencing changes in the late
nineteenth century, brewers in other parts of the UK acquired pub estates, operated largely by
tenants, as dedicated distribution for their production (Mutch, 2006). That the industry
survived into the 1990s with this structural arrangement was due in large part to the political
influence of ‘The Beerage’ (‘beer’ plus ‘peerage’) of wealthy family firms that controlled the
industry (Bower and Cox, 2012), supported by a trade organisation, The Brewers’ Society,
that acted as a private market-governance institution active in organising collective lobbying
(Yue, Luo and Ingram, 2013).
During the late 1940s prominent financiers emerged in the UK whose paths would
cross with the structure and ownership of the UK brewing and pub retailing industry as well
as the fledgling international spirits industry. Most notable were Charles Clore who launched
an unsuccessful hostile bid for London brewer Watney Mann, in 1959, and Sir Maxwell
Joseph, whose firm Grand Metropolitan was successful in a hostile approach for Watney
Mann in 1972, an acquisition that brought an associated stake in International Distillers &
Vintners, the foundation of today’s global spirits leader, Diageo (Williamson and Rix, 1988).
These hostile approaches triggered a “defensive anxiety” within the UK industry (Gourvish &
Wilson, 1994, P 460), This precipitated a series of mergers among largely family-controlled
firms in the early 1960s, creating what became known as the ‘Big 6’ national brewer-retailers
of Allied-Lyons, Bass, Courage, Scottish & Newcastle, Watney Mann and Whitbread.
With the support of a generally benign competition policy regime, and the political
lobbying efforts of the firms and their industry collective, the large firms were generally
3 Table 2 shows that the bulk of the brewers’ pub portfolios were tenanted outlets; the brewer owned the pub and
a tenant rented the property on (theoretically) below open market rental terms in lieu of an obligation to buy all
beer, wines, spirits and soft drinks from the brewer owner (usually referred to as a ‘property tie’). In addition to
this additional arrangements at that time included some that were similar to those in other Continental European
markets with many independent pubs also being partially controlled by the leading brewers through the
provision of subsidised financing in lieu of an exclusive supply contract (usually referred to a ‘loan-tie’). The
degree to which this also acted against the public interest was discussed extensively in the MMC inquiry into
Scottish & Newcastle’s hostile bid for regional brewer Matthew Brown in 1985 (MMC, Cmnd 9645).
8
supported and protected from the market for corporate control under the oversight of the Bank
of England (Roberts, 1992). Yet the firms were well aware of a threat to their existence from
the arrival of large scale sophisticated finance. Forming an investment structure, known as the
Whitbread Umbrella, to protect not just its own family interests but also those of small family
brewers with whom it had trading relationships, Whitbread’s influential former chief
executive, Sir Sydney Nevile, noted the “present fever of finance in the brewing
industry........I suggested that the interest of his company was merely to speculate in shares
and then sell them to the highest bidder” (File note of conversation with a non-executive
director of the Independent Commercial Finance Corporation on 27 March 1961, London
Metropolitan Archives).
The ‘Big 6’ Oligopoly Era.
Following Charles Clore’s failed hostile approach for Watney Mann the amalgamations that
formed the ‘Big 6’ brewer-retailers led to a substantial tightening of control over both
domestic brewing as well as the UK’s stock of pubs. Table 2 below shows the extent of the
pub estates of the Big 6 at the time of the 1989 anti-trust inquiry (By 1989 Watney Mann was
owned by Grand Metropolitan and Courage was a subsidiary of Australian brewer Elders IXL
as a result of 1970 conglomerate mergers involving Hanson Trust and tobacco combine
Imperial Group).
TABLE 2: Ownership of UK Public Houses
Brewer-
Retailer
Pubs
(1988)*
Mergers and
Acquisitions
Financial
Intermediation
Pub
Company
Mergers and
Acquisitions
Pubs
(2012)**
Allied-Lyons 2,199 (M)
4,479 (T)
Acquired by Punch
Taverns and Bass
(1999)
Hugh Osmond, George
Soros and other
financiers
Punch
Taverns
Demerged managed pubs
as Spirit (2001); re-
acquired Spirit (2006); demerged Spirit (2011)
4,790
Bass
2,420 (M)
Demerged (2003)
R20 (Robert
Tchenguiz); Piedmont (Joe Lewis) and Elpida
Mitchells &
Butlers 1,605
4,770 (T) Initial divestment
created Enterprise Inns (1991). Majority
created Punch
Taverns (1997)
Enterprise
Inns
Acquired various chains;
Unique Pub Company (2004) and parts of
Laurel Pub Company
(2002)
6,140
Courage 1,329 (M)
3,673 (T) Merger created
Inntrepreneur Estates Ltd (1990)
Morgan Grenfell/Deutsche
Bank; Nomura
Securities (Guy Hands)
Unique Pub
Company
Grand Met 4,571 (T)
1,848 (M) Scottish & Newcastle
acquired Grand Met
Retail (1993)
Blackstone, Texas
Pacific, CVC Partners Spirit Group
Acquired Scottish &
Newcastle Retail (2003).
Demerged from Punch
(2011)
803 Scottish &
Newcastle
881 (M)
1,406 (T) Divested (2000/1) Royal Bank of Scotland Heineken 1,300
Whitbread
1,870 (M) Divested in tranches and retained pub restaurants 389
4,613 (T) Divested (2001) Morgan Grenfell/Deutsche
Bank; R20
Laurel Pub
Company
Greene King 766 Acquired Magic Pub Company (1996); Morland and parts of Marston’s (1999); parts of Laurel
Pub Company (2004)
2,290
Marston’s 750 Previously named Wolverhampton & Dudley. Acquired JW Cameron (1992); Marston’s
(1999); Mansfield (2000)
2,090
Source: Firm websites and annual reports
*MMC, ‘Supply of Beer’ (1989); M = managed pubs; T = tenanted pubs ** British Beer & Pub Association, Statistical Handbook, 2012
Notwithstanding a 1969 anti-trust inquiry into perceived anti-competitive practices emanating
from the vertical ownership structure of the market the national brewer-retailers strengthened
9
their control of the industry in the 1970s and 1980s. Their attraction to property-backed
financiers did not diminish; there was a second successful hostile approach for Watney Mann
in 1972 from Sir Maxwell Joseph’s Grand Metropolitan (Williamson and Rix, 1988).
However, neither this acquisition nor the 1972 acquisition of Courage by Imperial Group
served to change the overall structure and operation of the industry. That the policy
environment was benign and helpful to the incumbents was evident in the sanctioning of a
voluntary agreement to reduce overall ownership of pubs, co-ordinated under the auspices of
the industry trade association, the Brewers’ Society (Spicer, Thurman, Walters and Ward,
2012). However, although the control of pubs was reduced from around 70% in the late 1970s
to closer to 50% by the 1980s, most of the reduction was due to sales of smaller tenanted
pubs. In fact ownership of the larger and more profitable managed pubs actually increased
during the 1970s.
The control of beer supply by the Big 6 was often cited as the reason why the price of
beer in pubs rose consistently above the level of general retail prices. Yet, the market for
corporate control did not work efficiently with respect to this industry. The era of corporate
specialization prompted by the emergence of corporate raiders and the 1980s ‘merger wave’
(Shleifer and Vishny, 1991) left the UK brewers largely unscathed. This was not for the want
of trying; Australian brewing/finance conglomerate, Elders IXL made two high profile and
politically-charged attempts to acquire UK brewers in the mid-1980s. Finance entered the
debate directly at the level of competition policy. Elders IXL’s 1985 hostile bid for Allied-
Lyons was referred to the MMC by the Secretary of State (for Trade and Industry) on the
basis that the bidder’s use of financial leverage might work against the public interest.
Although the Bank of England failed to endorse this, the delay, and a high-profile media
campaign through the conduit of The City, provided Allied-Lyons the time to enact the
‘poison pill’ defence of acquiring Canadian spirits firm, Hiram Walker before the bid was
cleared (MMC, Cmnd 9892, 1986). Elders withdrew its bid but returned two years later with
the more audacious and controversial bid for Scottish & Newcastle. The combination of
intense lobbying and wide political backing for the influential Scottish & Newcastle ensured
the bid was referred and somewhat uniquely, blocked (Bower and Cox, 2012; MMC, Cm 654,
1989).
Running concurrently with the Elders/Scottish & Newcastle inquiry, a general anti-
trust investigation concluded that a complex monopoly existed in the UK beer market which
could only be resolved by restricting the degree of industry vertical integration. A mandated
upper limit of 2,000 pubs for any brewer was made, meaning that an estimated 22,000 pubs
(30% of all pubs in England & Wales) would have to be divested by November 1992. The
referral for a second anti-trust inquiry, if not this decision, came as surprise to a previously
successful lobbying campaign spearheaded by the Brewers’ Society. Further high-level
discussions between the industry and Government ensured some moderation to these terms,
requiring the brewers to divest half of the excess of pubs in their stable over the 2,000
threshold (DTI Press Release, 89/745).
The 1989 inquiry anticipated that a less vertically-integrated beer market would both
widen consumer choice and lead to more competitive retail pricing. While choice materialised
quickly, aided by the ‘guest beer’ provision of the legislation (Day and Kelton, 2007) keener
beer prices proved elusive and indeed as Figure 1 below shows the gap between pub beer
prices (‘on-trade’) continued to widen relative to both general prices and wholesale beer
prices (‘PPI’). Moreover, it is clear that the gap with supermarket prices (‘off trade’) also
widened significantly. This has been viewed more recently in a less desirable light given the
perceived link between under-priced alcohol and ‘binge drinking’. It is ironic that the vertical
brewing tie emerged in London in response to legislation designed to promote beer and
10
reduce problematic gin consumption in Georgian London (the Sale of Spirits Act, 1750,
commonly known as the Gin Act).
FIGURE 1: Retail and Producer Prices of UK Beer
Source: Adapted from data supplied by British Beer & Pub Association, Statistical Handbook, 2012
The regulatory intervention through the structural remedy of the ‘Beer Orders’ was an
extreme measure by policy standards. Indeed, some ten years later the Director General of
Fair Trading described the remedy as a draconian requirement that was disproportionate to
the mischiefs the Beer Orders were designed to address (OFT, The Supply of Beer, 2000,
paragraph 2.3). That competition policy might have misunderstood the transmission
mechanism between wholesale and retail prices was highlighted in the dissenting letter of
Professor M E Beesley in the 1992 Allied-Lyons/Carlsberg UK brewing merger, (MMC, Cm
2029, 1992, p 89). As the 1990s progressed it was clear that the adverse effects of the brewing
complex monopoly transferred to an equally potent mechanism for controlling retail pub
prices under the PubCos. The PubCos, whose very existence is traced to a change in policy
and the legitimization of finance as a business model in its own right, were widely criticised
for not passing on the benefits of the keener wholesale beer price terms they extracted from
the brewers during the 1990s (Day and Kelton, 2007).
The ‘Financialization’ Era.
PubCos emerged to acquire blocks of tenanted pubs which the brewers were obliged to divest
to comply with the provisions of the Beer Orders. Over the following decade full-scale
financialization of the pub industry occurred as private equity-backed entities displaced
established brewer operators attracted to the very same attributes that had first attracted the
property financiers of the post-World War II generation. By the late 1990s the PubCos owned
11
and operated more than 50% of all pub outlets, as shown in Figure 2 below. Supporting the
change in ownership was the ability of the PubCos to negotiate substantial beer discounts
from a brewing industry struggling to reduce overcapacity at a time when UK beer
consumption was also declining (Cm1227, pages 11-12; Cm2029, page 44). The combination
of the well-publicised scale of wholesale beer discounts available and the evolution of the
securitization market underpinned an active mergers and acquisitions strategy within the
PubCo sector, as shown in Table 1 above.
FIGURE 2: Independent Pub Company Ownership of UK Public Houses
Source: Adapted from data supplied by British Beer & Pub Association, Statistical Handbook, 2012. ‘Other’ includes pubs
held within holding companies, operated on a temporary contract basis and those that are part of chains with less than 30
outlets.
The origins of the PubCo financing model can be traced to the novel ‘breweries-for-pubs
swap’ agreed between Grand Met and Elders IXL’s UK subsidiary, Courage (MMC, Cm
1227, 1990). This was the first merger in the immediate aftermath of the Beer Orders when
the industry was adapting to change in UK competition policy, itself increasingly under the
auspices of harmonization and oversight from European Commission policy directives (Cini
and McGowan, 1998). Specifically under EC Article 81 (3), certain vertical agreements,
including the UK brewers’ vertical tie had been granted a ‘block exemption’ but that expired
in 1997. The uniqueness of the merger agreement between Grand Met and Elders IXL, in
particular the partners’ use of upfront remedies to circumvent more obtrusive regulatory
intervention, was noteworthy in that it established a more conciliatory approach to merger
negotiations at the firm-firm level as well as firm-regulator level (Bower and Cox, 2013). Of
particular interest to this analysis, as it forms the bridge from policy to subsequent
financialization, is the evolution of the merged tenanted estate of 8,500 pubs. This combined
12
entity, known as Inntrepreneur Estates Limited (IEL), represented some 13% of the UK total
pub stock in the early 1990s.
From its inception IEL was structured as an independent joint venture, managed on an
arms-length basis with its own financing terms. The tenants were offered the opportunity to
share in the potential rewards of the new structure through newly established 20 year
assignable leases. Unfortunately as high profile complaints to the European Commission in
the mid-1990s show (Case Number IV/35.628/F3 – a ‘super-complaint’ made by the
Federation of Small Businesses on behalf of a group of former Inntrepreneur lessees) the
terms were not necessarily beneficial to the tenants. The decline of property prices created
significant operational as well as financial pressures and the joint venture parents were
distracted by their other, more substantive operations in other industries and markets. Parts of
the IEL estate were sold, largely to other small PubCos. More significant was a later series of
transactions, firstly with UK investment bank Morgan Grenfell (part of Deutsche Bank) and
then with Nomura Securities, which led to the Japanese bank becoming the UK’s largest
independent PubCo by 1998, under the direction of prominent ex-Goldman Sachs financier
Guy Hands.
The involvement of a well-known financier in the pub market precipitated interest
from other financial institutions. Industry commentary from observers close to many of the
deals drew attention to the weakness of the PubCo financing model. Profitability was flattered
by unsustainably high rents, low levels of capital spending and keen beer supply terms that
were unlikely to last. Moreover, Nomura’s financial backing owed much to the Japanese
bank’s ability to borrow cheaply in Yen, and a deregulated Japanese banking industry that
increasingly incentivised foreign investment (Hoshi and Kashyap, 2000, p164). Financiers
were either not cognisant of, or chose to ignore data that showed IEL tenancy default rates
close to 20% during the 1990/91 recession. In the economic recovery of the mid-late 1990s
default rates naturally fell but these lower default rates were factored into many PubCo
financing models in addition to the beneficial beer supply terms captured and retained in the
PubCo centres. With an active market for securitization of rental cash flows (Girόn and
Chapoy, 2012) an apparent ‘money machine’ encouraged more ambitious merger strategies.
That financialization had come to dominate the structure and operation of the pub
industry, was evident by the latter part of the 1990s, when private equity-backed vehicles
were able to outbid long-standing industry operators for prime retail assets. The 1999 battle
for control of the former Allied-Lyons pub estate is informative in this regard. While the
interjection of the Secretary of State served to thwart the merger proposal of pub industry
leader Whitbread, the ability of the finance-backed Punch Taverns to win the contest put
financiers at the heart of the pub industry (The Lawyer, 1999). Punch Taverns had only been
operating as an independent entity since 1997. Following a listing on the UK stock market,
Punch embarked on an aggressive acquisition strategy funded by large amounts of debt
secured against the firm’s property assets (The Telegraph, 2010), that led eventually to a
proposed all-share merger with Mitchells & Butlers (M&B), the managed pub estate of the
former Bass. Had this deal transacted Punch would have controlled one sixth of the UK pub
market, with some 10,500 outlets. In the ensuing financial crisis of 2008, however, Punch’s
fortunes went into dramatic decline with falling property prices and a weak pub trading
environment forcing the resignation of its chief executive in January 2009, as the group
courted bankruptcy. For its part, M&B, similarly engaged in financial engineering, was forced
to concede that a pre-Financial Crisis interest rate derivative position established with
property entrepreneur, Robert Tchenguiz, to enhance shareholder value had failed. The
subsequent charge to the firm’s accounts of £274m was the basis for the resignation of the
finance director and chief executive officers (M&B annual report, 2008).
13
In concluding this era understanding how the Royal Bank of Scotland, saved by the
UK government and taxpayers in the Financial Crisis, came to own part of the UK pub
industry is also important. As banker to Scottish & Newcastle it had supported that firm’s
mergers and acquisitions growth strategy from its UK base through the subsequent
internationalisation into European brewing. To reduce group debt following these
increasingly large acquisitions (the acquisition of Danone’s French brewing operation,
Kronenbourg in 2000) Scottish & Newcastle was forced to sell its pub estate. Initially it sold
small numbers of tenanted pubs to Royal Bank of Scotland - in April 2000 a small chain of
447 outlets. With further disposals in 2001 Royal Bank of Scotland became a tenanted pub
owner of 1,000 outlets. Scottish & Newcastle retained property management services under a
management contract and a beer supply deal from its brewing division (The Telegraph, 2001).
Ultimately, Scottish & Newcastle, under pressure from shareholders, sold its managed pub
estate to the finance-backed Spirit Group, in October 2003.
Royal Bank of Scotland remained the owner of the former Scottish & Newcastle
tenanted pubs and it is these assets that were acquired in 2011 by international brewer
Heineken. It is with some irony, perhaps, that Heineken acquired these pubs, having acquired
Scottish & Newcastle as part of joint hostile bid with Carlsberg in 2007. Although Heineken
had a presence in the UK brewing industry for many decades through the conduit of a licence
brewing and distribution agreement with Whitbread, it is significant that in developing its
own directly controlled UK operation through Scottish & Newcastle brewing it has also
chosen to re-acquire former Scottish & Newcastle pubs from a finance entity and in so doing
recreate a vertical integration model not unlike the original Big 6 brewers.
CONCLUSIONS
The aim of my article is to highlight how competition policy interacts with finance and the
capital markets in preventing or augmenting change in industry structure and the boundaries
of firms operating within it by recourse to an empirical longitudinal study of the evolution of
the UK brewing and pub industry. The requirement for a deeper understanding of firm and
industry interaction with the institutional environment continues, in particular with regard to
anti-trust and how firms adapt to and seek to influence institutional change and regulatory
shifts in dynamic and complex environments (Child and Rodrigues, 2011; Jacobides and
Winter, 2012; Peng et al, 2009). I presented an empirical study of an industry that was, by
tradition, vertically integrated, and remained so for nearly two centuries supported by history,
political voice and, perhaps, on reflection, a sound base in the theory of transaction costs.
The link between transaction cost economics and the regulatory environment lies in
the oversight of vertical restraint in competition policy. Indeed, the transaction cost
economics framework was established by Williamson in his early analysis of anti-trust and
competition policy (Williamson, 1971; 1991; 2010). In a market with the potential for
foreclosure efficiency benefits from vertical integration are unlikely to outweigh the welfare
cost of the restraint of trade (Lafontaine and Slade, 2010). However, although the mostly
econometric analyses highlights adverse welfare effects of vertical arrangements, legal
scholars have cautioned that competition policy needs to be cognisant of the transaction-based
attributes of incumbent firm organizational structures, the reasons why they emerged, and the
consequences of changing them through divestiture (Joskow, 2002).
Although an extensive discussion of transaction cost economics is outside the scope of
this article, its advantage to the UK brewing industry, the economic support for which was
14
dismissed by the 1989 ‘Beer Orders inquiry4, is relevant to contextualizing Heineken’s recent
decision to acquire pubs from the Royal Bank of Scotland. For an international brewer with
no prior ownership of public houses despite its long association with the UK brewing
industry, this decision may be as significant in policy terms as it is in signalling that
financialization has reached an end-point in this industry. The financialized business model of
the PubCos might therefore constitute further examples of interim hybrid structures and new
organizational forms, some of which are ultimately unstable, that emerge in other frequently
vertically-integrated industries, such as the electricity industry (Delmas and Tokat, 2005;
Russo, 2001) although several earlier empirical studies have shown that firms can co-exist for
extended periods with organizational structures that are anomalous (Chiles and McMackin,
1996).
The change imposed by competition policy corresponded to the era of more readily
available finance and financial innovation. Without the former the PubCo business model
might not have emerged. It is perhaps more certain that without the latter, it would have
remained a minority structural innovation; its wider acceptance owed much to the entry of a
prominent financier, backed by the balance sheet of a leading international investment bank.
Anchored in the era of securitization (Girόn and Chapoy, 2012) and the financialized business
model of firms such as Enron (Froud et al, 2004) the lower default pub rental cashflows and
keener beer supply terms encouraged both new entry and consolidation. The PubCos were
able to out-compete and out-bid traditional firms such as Whitbread in the acquisition of other
attractive chains of pubs and restaurants.
The experience of the last few years in the aftermath of the Financial Crisis has shown
that the PubCo model and some of the more esoteric financial instruments supporting it are
fundamentally unstable. What appears to be unfolding is the destabilizing impact of strategies
that are supported by financialization rather than genuine business logic in a financially
repressed era. The consequences for policy makers in the politically and socially sensitive
area of alcohol distribution are potentially significant. The ownership and structure of firms
and the manner in which industry value chains operate today is the subject of a wider
institutional and political debate, as the recent UK food industry scandals demonstrate.
Certainly the Beer Orders did not anticipate the degree to which beer consumption patterns
would change and in particular the significance of the take-home trade now controlled by the
leading supermarket groups. Moreover, with financial and tax engineering a topical media
line of inquiry in both the US and UK, ownership structures and novel business models that
dominate other socially important sectors have come under greater scrutiny. A recent article
concerning the former state-controlled UK water firms (‘UK water companies avoid paying
tax’, The Telegraph, 15 February 2013) highlighted how this core domestic utility is now
largely owned by non-UK domiciled financial intermediaries with highly leveraged financial
arrangements. Financialization extends into an unavoidable discussion of what might happen
in the event of a debt default by a firm that provides an essential public service. As we have
discovered for the banking industry, tax payers are almost invariably the owner or lender of
last resort, as indeed they became, albeit temporarily, for parts of the UK pub industry.
4 As part of the evidence presented to the inquiry, the Brewers’ Society commissioned an academic analysis by
two leading University of Oxford regulatory economists, Professors Morris and Yarrow, to present a detailed set
of reasons why vertical integration was an efficient organizational structure which did not act against the public
interest (MMC, Cm 651, paragraphs 5.18-5.57 and Appendix 5.2).
15
REFERENCES
Aktas, N., de Bodt, E., & Roll, R. 2007. Is European M&A regulation protectionist? The
Economic Journal, 117:1096-1121.
Bansal, P., & Corley, K. 2011. The coming of age for qualitative research: Embracing the
diversity of qualitative methods. Academy of Management Journal, 54(2): 233-237.
Becker, J., Jäger, J., & Leubolt, B. 2010. Peripheral financialization and vulnerability to
crisis: A regulationist perspective. Competition and Change, 14(3-4): 225-247.
Bhagat, S., Shleifer, A., & Vishny, R. W. 1990. Hostile takeovers in the 1980s: The return to
corporate specialization. Brookings Papers: Microeconomics.
Bower, J., & Cox, H. 2012. How Scottish & Newcastle became the UK’s largest brewer: A
case of regulatory capture? Business History Review, 86: 43-68.
Bower, J., & Cox, H. 2013. Merger regulation, firms and the co-evolutionary process: An
empirical study of internationalisation in the UK alcoholic beverages industry 1985-
2005. Working paper no 48, Centre for Globalisation Research, Queen Mary,
University of London, UK.
Child, J., & Rodrigues, S. B. 2011. How organizations engage with external complexity: A
political action perspective. Organization Studies, 32(6): 803-824.
Child, J., Rodrigues, S. B., & Tse, K. K-T. 2012. The dynamics of influence in corporate co-
evolution. Journal of Management Studies, 49(7): 1246-1273.
Chiles, T. H., & McMackin, J. F. 1996. Integrating variable risk preferences, trust and
transaction cost economics. Academy of Management Review, 21(1): 73-99.
Coate, M. B., Higgins, R. S., & McChesney, F. S. 1990. Bureaucracy and politics in FTC
merger challenges. Journal of Law and Economics, 33(2): 463-482.
Dal Bó, E. 2006. Regulatory capture: A review. Oxford Review of Economic Policy, 22(2):
203-225.
Da Silva Lopes, T. 2002. Brands and the evolution of multinationals in alcoholic beverages.
Business History, 44(3): 1-30.
Day, H., & Kelton, R. 2007. The valuation of licensed premises. Journal of Property
Investment & Finance, 25(3): 306-321.
Delmas, M., & Tokat, Y. 2005. Deregulation, governance structures and efficiency: The US
electric utility sector. Strategic Management Journal, 26: 441-460.
Dobson, P. 2002. Merger assessment in oligopolistic markets: Lessons from Interbrew/Bass.
Paper presented at NIE Conference on Competition Policy and Regulation.
Doz, Y. 2011. Qualitative research for international business. Journal of International
Business Studies, 42(4): 582-590.
Eisenhardt, K. M., & Graebner, M. E. 2007. Theory building from cases: Opportunities and
challenges. Academy of Management Journal, 50(1): 25-32.
Franks, J., & Mayer, C. 1996. Hostile takeovers in the UK and the correction of managerial
failure. Journal of Financial Economics, 40(1): 163-181.
Fiss, P. C., & Zajac, E. J. 2004. The diffusion of ideas over contested domain: The (non)
adoption of a shareholder value orientation among German firms. Administrative
Science Quarterly, 49: 501-534.
Folkman, P., Froud, J., Johal, S., & Williams K. 2007. Working for themselves? Capital
market intermediaries and present day capitalism. Business History, 49(4): 552-572.
Froud, J., Johal, S., Papazian, V., & Williams, K. 2004. The temptation of Houston: A case
study of financialisation. Critical Perspectives on Accounting, 15: 885-909.
16
Geppert, M., Dӧrrenbächer, C., Gammelgaard, J., & Taplin, I. 2013. Managerial risk-taking in
international acquisitions in the brewery industry: Institutional and ownership
influences compared. British Journal of Management, 24: 316-332.
Girόn, A., & Chapoy, A. 2012. Securitization and financialisation. Journal of Post Keynesian
Economics, 35(2): 171-188.
Gourvish, T. R., & Wilson, R. G. 1994. The British Brewing Industry 1830-1980.
Cambridge, UK: Cambridge University Press.
Hannah, L. 1974. Takeover bids in Britain before 1950: An exercise in business ‘pre-history’.
Business History, 16(1): 65-77.
Hannah, L. 2007. The ‘divorce’ of ownership from control from 1900 onwards: Re-
calibrating imagined global trends. Business History, 49(4): 404-438.
Higgins, D. M., & Toms, S. 2011. Explaining corporate success: The structure and
performance of British firms, 1950-84. Business History, 53(1): 85-118.
Hoshi, T., & Kashyap, A. 2000. The Japanese banking crisis: Where did it come from and
how will it end? In B. S. Bernanke & J. J. Rotemburg (Eds), National Bureau of
Economics Research, Macroeconomics Annual, 14: 129-212. MIT, US.
Jacobides, M. G., & Winter, S. G. 2005. The co-evolution of capabilities and transaction
costs: Explaining the institutional structure of production. Strategic Management
Journal, 26: 395-413.
Jacobides, M. G., & Winter, S. G. 2012. Capabilities: structure, agency and evolution.
Organization Science, 23(5): 1365-1381.
Joskow, P. L. 2002. Transaction cost economics, antitrust rules, and remedies. The Journal of
Law, Economics, & Organization, 18(1): 95-116.
Kostova, T., Roth, K., & Dacin, M. T. 2008. Institutional theory in the study of multinational
corporations: A critique and new directions. Academy of Management Review, 33(4):
994-1006.
Laffont, J-J., & Tirole, J. 1991. The politics of government decision-making: A theory of
regulatory capture. The Quarterly Journal of Economics, 106(4): 1089-1127.
Lafontaine, F., & Slade, M. E. 2010. Transaction cost economics and vertical market
restrictions – evidence. The Antitrust Bulletin, 55(3): 587-611.
Lazonick, W. 2010. Innovative business models and varieties of capitalism: Financialization
of the US corporation. Business History Review, 84(Winter): 675-702.
Martimort, D. 1999. The life cycle of regulatory agencies: dynamic capture and transaction
costs. Review of Economic Studies, 66: 929-947.
Massey, P. 2000. Market definition and market power in competition analysis: Some practical
issues. The Economic and Social Review, 31(4): 309-328.
Mutch, A. 2006. Allied Breweries and the development of the area manager in British
brewing, 1950-1984. Enterprise & Society, 7(2): 353-379. Mutch, A. 2010. Improving the public house in Britain, 1920-40: Sir Sydney Nevile and ‘social work’.
Business History, 52(4): 517-535.
Orhangazi, O. 2008. Financialisation and capital accumulation in the non-financial corporate
sector: A theoretical and empirical investigation on the US economy, 1973-2003.
Cambridge Journal of Economics, 32: 863-886.
Peng, M. W., Sun, S. L., Pinkham, B., & Chen, H. 2009. The institution-based view as a third
leg for a strategy tripod. Academy of Management Perspectives, (August): 63-81.
Porter, M. E. 1996. What is strategy? Harvard Business Review, (Nov-Dec): 61-78.
Roberts, R. 1992. Regulatory responses to the rise of the market for corporate control in
Britain in the 1950s. Business History, 34(1): 183-200.
17
Rowlinson, M., Toms, S., & Wilson, J. F. 2007. Competing perspectives on the ‘Managerial
Revolution’: From ‘Managerialist’ to ‘Anti-Managerialist’. Business History, 49(4):
464-482.
Russo, M. V. 2001. Institutions, exchange relations, and the emergence of new fields:
Regulatory policies and independent power production in America, 1978-1992.
Administrative Science Quarterly, 46: 57-86.
Shaffer, B. 1995. Firm-level responses to government regulation: Theoretical and research
approaches. Journal of Management, 21(3): 495-514.
Shaffer, B., & Hillman, A. J. 2000. The development of business-government strategies by
diversified firms. Strategic Management Journal, 21: 175-190.
Shleifer, A., & Vishny, R. W. 1991. Takeovers in the ‘60s and the ‘80s: Evidence and
implication. Strategic Management Journal, 12: 51-59.
Shleifer, A., & Vishny, R. W. 1997. A survey of corporate governance. The Journal of
Finance, 52(2): 737-783.
Siggelkow, N. 2007. Persuasion with case studies. Academy of Management Journal, 50(1):
20-24.
Skott, P., & Ryoo, S. 2008. Macroeconomic implications of financialisation. Cambridge
Journal of Economics, 32: 827-862.
Slade, M. E. 2011. Competition policy towards brewing: Rational response to market power
or unwarranted interference in efficient markets? In J. F. N. Swinnen (Ed), The
Economics of Beer. Oxford, UK: Oxford University Press.
Spicer, J., Thurman, C., Walters, J. & Ward, S. 2012. Intervention in the Modern UK
Brewing Industry. Basingstoke, UK: Palgrave Macmillan.
Stockhammer, E. 2004. Financialisation and the slowdown of accumulation. Cambridge
Journal of Economics, 28: 719-741.
Thackray, J. 1986. Leveraged buyouts: the LBO craze flourishes amid warnings of disaster
Euromoney Magazine. 2 January.
The Lawyer. 1999. Punch drunk, 13 September.
The Telegraph. 2001. Scottish & Newcastle offloads pubs to bank, 27 October.
The Telegraph. 2010. Giles Thorley: The pub boss who loved the good time’, 31 March.
Toms, S., & Wright, M. 2002. Corporate governance, strategy and structure in British
business history, 1950-2000. Business History, 44(3): 91-124.
Williamson, O. E. 1971. The vertical integration of production: Market failure considerations.
American Economic Review, 61: 112–123.
Williamson, O. E. 1991. Strategizing, economizing, and economic organization. Strategic
Management Journal, 12: 75-94.
Williamson, O. E. 2010. Reflections on antitrust. The Antitrust Bulletin, 55(3): 543-544.
Williamson, P., & Rix, B. 1988. Grand Metropolitan PLC. London Business School, Case
Study, 9-788-01.
Winerman, M. (2003). ‘The origins of the FTC: concentration, cooperation, control and
competition’. Antitrust Law Journal, 71, 1-97.
Wood, G., & Wright, M. 2010. Wayward agents, dominant elite or reflection of internal
diversity? A critique of Folkman, Froud, Johal and Williams on financialisation and
financial intermediaries. Business History, 52(7): 1048-1067.