In a shock decision, UK trade and industry secretary Stephen Byers has refused to rubberstamp the £2.3 billion sale of Bass to Belgian brewing giant Interbrew.

Britain's Competition Commission had ruled that the merger was against the public interest, a judgement Byers said he accepted because “the merger would reduce competition in the market, lead to higher prices for end consumers and reduce consumer choice.”

Informed observers had expected Interbrew to come up with concessions to satisfy the Commission’s concerns and bring together its flagship brand Stella Artois with Bass’ leading lager Carling. The deal would have placed four of the UK’s top beer brands in Interbrew’s portfolio.

Complained Interbrew chief executive Hugo Powell: “This recommendation defies logic and is clearly disproportionate to the competition issues at stake.” It is expected to slice up to £600 million from the Belgian company’s bottom line, while speculative investors will be equally hard hit.

Interbrew stock plunged 22% following the news, closing yesterday at 29 euro(£18), below the 33 euro issue price.

News source: The Times (London)