Scottish & Newcastle

It is nearly a year since Peter Kennerley left Simmons & Simmons, where he was a corporate partner, to join Scottish & Newcastle (S&N), the UK’s biggest brewer.

“I am company secretary and corporate lawyer, so I am doing the corporate law I did before but in an in-house capacity advising the board. It is a highly-regulated industry in terms of competition issues, and it is a fascinating company to work for,” he says.

The day-to-day legal work for S&N’s three divisions – beer, retail and leisure – is handled by the group legal services team, which is run by director of legal services Andrew Vellani. Five lawyers are based at the company’s Edinburgh headquarters with Kennerley. One is based in The Netherlands to oversee Center Parcs.

The brewing arm, Scottish Courage, produces household names like Newcastle Brown Ale and John Smith’s, and licensed brands including Kronenbourg and Beck’s.

The retail operation has more than 2,800 nightclubs, hotels and pubs, including the Chef & Brewer, Lodge Inns and Old Orleans chains.

But S&N is selling the holiday camp chains Center Parcs and Pontins to concentrate on brewing.

The company’s main corporate firm Linklaters & Alliance is acting on the sale, as it did on S&N’s last big deal, last year’s purchase of Greenalls pubs for £1.1bn.

Linklaters is responsible for most of the company’s major corporate, competition, property and litigation work. “They have been the lawyers to the company for many years and we have a very good relationship with them. In addition to that we use a lot of other firms,” says Kennerley.

Some licensing and regulatory work is done in-house, but the main job of the legal team is to manage the outsourcing of work to the various firms the company uses.

These include Lawrence Graham for smaller scale corporate advice and Wragge & Co and Eversheds for general work. Morton Fraser and Shepherd & Wedderburn are the main advisers in Scotland, and Milton Keynes’ Kimbell & Co advises on its speciality of licensing and beer regulation matters.

Kennerley has not made major changes to the firms used by the company but says Vellani is “always reviewing our relationships on a day-to-day basis”.

He has instructed his old firm Simmons, but will not go into detail about the matter.

Kennerley says it is important for brewers to use firms that understand the industry. “Like any major company we need top level technical commercially oriented legal advice, but there are important regulatory areas where it is important that firms understand the business and business background,” he says.

Regulations aimed specifically at the brewing industry include the 1989 Beer Orders, which limit the number of pubs brewers are allowed to own, and UK and EU competition rules that affect the contracts between brewers and retailers.

“Competition is a major issue. Brewing as an industry has always attracted the attention of successive governments. The Beer Orders are under review by the Office of Fair Trading and it is possible we may see a change in those regulations.

“There has also been speculation about consolidation of the industry. Bass has put its brewing arm up for sale and there has been speculation about Whitbread.”

Kennerley says that S&N is committed to expanding internationally, but he has not instructed any foreign law firms. This could be good news for Linklaters, which is advising on Dutch aspects of the Centre Parcs sell-off.

The prospect of internationalisation throws up intellectual property issues, which are dealt with by Linklaters. Newcastle Brown Ale’s sales are now greater outside the UK than at home, and protecting brands around the world is “crucial to the business”, says Kennerley.

The legal department deals with a range of issues from major M&A deals to social issues like drink-driving.
Peter Kennerley
Head of legal and company secretary
Scottish & Newcastle

Statistics
Organisation Scottish & Newcastle
Sector Brewing, retail and leisure
FTSE 100 ranking 97
Market capitalisation £2.6bn
Employees 47,000
Legal function Seven lawyers
Head of legal Company secretary Peter Kennerley
Reporting to Brian Stewart, group chief executive
Main location for lawyers Edinburgh
Main law firms Linklaters & Alliance, Lawrence Graham, Eversheds, Wragge & Co, Morton Fraser, Shepherd & Wedderburn, Kimbell & Co