Cross-shareholding Probe Could Keep Diageo’s $2b EABL Sale on Hold
The Comesa Competition Commission's investigation into cross-shareholding among major brewers has created a setback for Diageo, which recently paid a $750,000 fine in September for anti-competitive practices. The inquiry may delay the company’s intended $2.2 billion sale of its 65 percent stake in East African Breweries Limited (EABL).
EABL, which owns Uganda Breweries, is a key asset in Uganda and across the region. The ongoing probe is examining ownership connections among leading brewers within the common market, sparking concerns that such links could hinder fair competition.
Commission’s Position
“There is an ongoing investigation, generally for several beer companies that have cross-shareholding in each other as minority or majority shareholders, which is not a wrong thing. What becomes wrong is what you do with cross-shareholding,” said Willard Mwemba, CEO of the Comesa Competition Commission.
Mwemba emphasized that cross-shareholding itself is not prohibited but noted that the Commission will withhold further comment until its examination concludes.
Impact on Diageo’s Plans
The unresolved inquiry could postpone Diageo’s exit from EABL indefinitely, highlighting the growing regulatory scrutiny facing multinational brewers over potentially anti-competitive corporate ties.
Author’s Summary: The Comesa probe into cross-shareholding may significantly delay Diageo’s $2.2b sale of its EABL stake amid competition concerns in the regional market.