THE UK Government has blocked Belgian group Interbrew's acquisition of Bass Brewers, saying the merger would operate against the public interest.

Trade and Industry Secretary Stephen Byers said he had accepted the conclusion of the Competition Commission, endorsed by the Director General of Fair Trading (DGFT).

He added that Interbrew should be required to sell Bass Brewers in the UK to a buyer approved by the DGFT.

Mr Byers said the merger would "reduce competition in the market, lead to higher prices for end consumers and reduce consumer choice".

"The Competition Commission found that the merger would strengthen Interbrew's market position, with four of the ten top selling beer brands, including two of the top three, Carling and Stella Artois."

He said this would create an "effective duopoly" in the industry between Interbrew and its nearest rival Scottish and Newcastle.

Interbrew completed the £2.3bn acquisition of Bass in August, and in September, the deal was referred to the Competition Commission.

The Belgian group's acquisition had followed its £400m purchase of Whitbread in May.

The Competition Commission handed its report to Mr Byers for his decision in December, and at the time, it had been expected by the industry that Interbrew would not be forced into a complete sale of Bass but would instead have to sell a number of brands.

The DTI said the Competition Commission had considered a range of "behavioural and structural remedies" to the deal but had concluded these would not work.

It had also given "careful consideration" to whether selling the Whitbread brewing business with the licence rights to Stella Artois would remedy the effects, but the majority of the Competition Commission group members had decided this would not be sufficient.

The Competition Commission concluded that Bass Brewers was a "viable business" that could be sold "without complications".