Parliament to investigate Heineken over pension obligations
Mud sticks. In all likelihood the probe by the House of Commons select committee into Heineken’s takeover of brewer Scottish & Newcastle amid allegations that Heineken broke promises to tens of thousands of pensioners, may come to nothing. Or rather it may come to the conclusion that Heineken actually did not dishonour its pension promises. But the fact that the UK’s number two brewer Heineken is being dragged before parliament with all the ensuing negative publicity should be enough to make Heineken’s spin doctors work overtime.
In July 2011 it was reported that the Commons’ business, innovation and skills select committee (BIS) has agreed to investigate the GBP 7.8 billion (EUR 8.8 billion) joint takeover of S&N by Heineken and Denmark’s Carlsberg this autumn.
It follows strong lobbying by the S&N Pensions Group (SNPG). The campaign group, which has several hundred members, says Heineken has effectively abandoned a decades-long S&N policy of providing inflation-linked pension increases. This policy, SNPG claims, Heineken acknowledged when it bought S&N.
The MPs’ intervention is seen as significant because the BIS select committee investigated the controversial USD 22 billion Kraft takeover of Cadbury in 2010. While the committee’s findings are largely symbolic – the BIS committee certainly cannot revoke business deals – they can still seriously damage a company’s reputation.
Tom Ward, former S&N corporate development and strategy director, and spokesman for the SNPG, was quoted as saying: "We are delighted that the parliamentary select committee is going to hold a wide-ranging inquiry. This is a good result as it will allow all the issues to be looked at in detail and with public scrutiny. Before the takeover of S&N we understood that Heineken stood firmly behind its public and private commitments on pensions.”
"Given the standing, size and reputation of Heineken, that gave us great comfort. To make a U-turn on this very public undertaking is deeply offensive."
Heineken denies it broke any commitments. Last year’s decision not to make an inflation-linked pension increase was due to the outlook for the pension fund – the deficit is estimated to be GBP 570 million (EUR 655 million). Heineken maintains that it was clear that payments would be "discretionary" and the decision would be reviewed each year.
Heineken paid an inflation-linked increase for 2008. There was no similar rise in 2009 when inflation was virtually zero, and no increase in 2010.
