THE TOTAL UK BEER MARKET , IS ALSO IN JOINT SECOND POSITION ( WITH ALLIED BREWERIES ) AMONG THE COUNTRY'S LAGER PRODUCERS . GM SUPPLIES CLOSE ON 24 000 ON-LICENCE OUTLETS ( I . E . LICENSED TO SELL ALCOHOLIC LIQUOR FOR CONSUMPTION ON THE PREMISES ) , OF WHICH ABOUT HALF ARE TIED HOUSES COMMITTED TO PURCHASING GM BEER BRANDS . IT ALSO SELLS TO ABOUT 12 000 OFF-LICENCE OUTLETS ( I . E . LICENSED TO SELL ALCOHOLIC DRINKS FOR CONSUMPTION OFF THE PREMISES ) , ABOUT 1 000 OF WHICH ARE ALSO TIED TO GM BY LONG-TERM PURCHASE AGREEMENTS .
B . BACKGROUND OF THE LAGER AGREEMENT
CARLSBERG BREWERIES HAVE BEEN EXPORTING THEIR PRODUCTS , INTER ALIA TO THE UNITED KINGDOM , FOR OVER A CENTURY . IN THE LATE 1960S THEY WERE SENDING A MILLION HECTOLITRES OF LAGER BEER A YEAR TO THE UNITED KINGDOM , WHERE IT WAS DISTRIBUTED BY THE THREE AGENCIES OF CARLSBERG . BECAUSE OF THE CONSIDERABLE INCREASE IN THE VOLUME EXPORTED AND THE FORECAST GROWTH IN DEMAND , CARLSBERG ENTERED INTO NEGOTIATIONS WITH WATNEY MANN LTD WITH A VIEW TO SETTING UP A JOINT SUBSIDIARY TO PRODUCE A NUMBER OF LAGER BEERS UNDER THE CARLSBERG BRANDS . A " SHAREHOLDERS AGREEMENT " WAS SIGNED BY CARLSBERG AND WATNEY ON 1 DECEMBER 1970 UNDER WHICH WATNEY SUBSCRIBED 49 % OF THE SHARE CAPITAL OF THE NEW COMPANY , CARLSBERG BREWERY LTD , WHICH CARLSBERG HAD SET UP ON 1 MAY 1970 . A BREWERY WITH AN INITIAL CAPACITY OF 1 000 000 HL A YEAR WAS BUILT AT NORTHAMPTON AND WENT INTO PRODUCTION IN AUGUST 1973 . UNDER A SALES AGREEMENT , ALSO SIGNED ON 1 DECEMBER 1970 , WATNEY WAS LICENSED TO SELL CARLSBERG BEERS FROM ITS OUTLETS . IN OCTOBER 1975 , CARLSBERG BOUGHT BACK WATNEY'S HOLDING IN THE PREVIOUS JOINT SUBSIDIARY CARLSBERG LTD , BUT THE DISTRIBUTION AGREEMENTS WHEREBY CARLSBERG BEERS WERE SOLD THROUGH WATNEY'S NETWORK OF TIED HOUSES CONTINUED IN FORCE . WHEN IT BECAME APPARENT THAT A DOUBLING OF PRODUCTION CAPACITY AT THE NORTHAMPTON BREWERY WOULD NOT BE ENOUGH TO MEET THE GROWING DEMAND FOR LAGER ON THE BRITISH MARKET , CARLSBERG ENTERED IN 1975 INTO A LICENSING AGREEMENT WITH GM AS THE PARENT COMPANY OF THE MERGED WATNEY MANN AND TRUMAN WHEREBY GM WAS PERMITTED TO PRODUCE CARLSBERG 1 030} ( 4 ) IN THE BREWERIES BELONGING TO THE GROUP AND TO SELL IT IN THE UK MARKET . THIS AGREEMENT HAS NOW BEEN SUPERSEDED BY A PRODUCTION AND SALES AGREEMENT , KNOWN AS THE LAGER AGREEMENT , SIGNED BY CARLSBERG AND GM ON 2 JUNE 1980 , WHICH IS THE SUBJECT OF THIS DECISION .
C . THE LAGER AGREEMENT
THE PURPOSE OF THE AGREEMENT IS TO ENSURE OPTIMUM UTILIZATION BY CARLSBERG LTD AND WMTB OF THEIR PRODUCTION FACILITIES FOR CARLSBERG BEERS AND TO DEVELOP THE SALE OF THESE PRODUCTS IN THE UNITED KINGDOM . THE ESSENTIAL TERMS OF THE AGREEMENT ARE NOW AS FOLLOWS