A claim by a number of drinks' manufacturers and distributors that the Competition Authority had prejudged the issue of whether to grant a licence to Guinness to complete the outright purchase of United Beverage Holdings (UBH) was rejected by the High Court yesterday.

In his judgment on allegations of bias and prejudgement in the authority's decision, which are one aspect of the challenge to the authority's decision to give the go-ahead to Guinness, Mr Justice Kearns said it was claimed the authority had in effect decided the entire matter in favour of Guinness between November 27th, 1997 and January 9th, 1998, without exhausting its own procedures and when a number of third parties still had much to say.

There was an associated submission that, in so acting and deciding, the authority had failed to observe the requirements of natural justice and fair procedures. The judge rejected both those claims.

Following Mr Justice Kearns decision on that aspect of the case, the hearing, which opened on January 13th last, resumed.

In the proceedings, Murphy's Brewery, Cork, and three other companies, M & J Gleeson and Co, Comans Wholesale Ltd and J. Donohoe Ltd, are challenging the decision of the authority to sanction the Guinness buy-out of UBH.

Earlier last year, Guinness paid out £33 million for the outstanding stake in UBH which it did not own. In return, Guinness agreed to sell its 49.5 per cent stake in Cantrell & Cochrane (C&C) for £270 million sterling (€391.75 million) to Allied Domecq which then held 50.4 per cent of C&C.

Last July, the authority gave its final approval for the Guinness buy-out of UBH. Guinness and the authority have denied the decision is in breach of the Competition Act.

In his decision on the prejudgement aspect of the case yesterday, Mr Justice Kearns said a perfectly reasonable explanation existed for the events which took place between November 1997 and February 1998 relating to the UBH buyout. He said the Guinness lawyers had a very good reason to come to the Competition Authority at that time. They very understandably needed to know if they were running the risk of double jeopardy on divesting requirements set out in the European Commission decision of October 15th, 1997 - which permitted the Grand Met/ Guinness merger subject to certain divesting measures - and any possible divesting requirements the authority in Ireland might have in the context of Guinness's amended application in relation to UBH.

The judge said the authority acted in a completely independent manner in indicating the minimum criteria it saw as appropriate for the possible grant of a licence, at that point in time, for the acquisition of UBH.

The judge said the giving of that indication by the authority did not foreclose further consideration of the Guinness application by the authority or prevent the authority from changing its view at a later stage when a final decision had to be made on the application.

He was not saying the authority had made the correct or incorrect decision in deciding to grant the licence but merely that they did not foreclose their options.