When Deepak Malhotra talks about buying a beer, he is not referring to his next pint. As Western European general counsel for the world’s single largest brewer InBev, beer for Malhotra is all about business. His idea of a cold one is a deal such as the e98m (£67m) acquisition of Becks UK’s distribution rights from Scottish & Newcastle last year.
“Ultimately, if you’re in business, it’s about winning,” enthuses Malhotra. “You have to develop a winning agenda and stick to it.”
With a brand portfolio that includes international names such as Becks, Stella Artois and Brahma – the Brazilian beer that is the eighth best-selling in the world – alongside big regional names such as Bass and Tennents, Malhotra has plenty to keep him occupied.
Under the supervision of global general counsel Sabine Chalmers, who joined InBev in January last year from fellow drinks giant Diageo, the company is in the throes of its first-ever global panel review, as first reported by The Lawyer (13 February). The move is hugely symbolic for InBev because it currently has relationships with a plethora of firms and outsources legal work on a country-by-country basis. Indeed, with a legal spend of e10m (£6.8m) last year for the Western Europe zone alone – e6m (£4.1m) of that external – the outcome will be highly significant for the victorious firms.
Commenting on the objective behind the global panel review, Malhotra explains that it is “more than just, ‘we send you the instruction and we get the advice back’.” What InBev is looking for, he says, “is proactivity”.
“External firms will need to know our business,” explains Malhotra, who outside work is also chair of the London branch of the Commerce & Industry Group. “When they understand us and have a lot of contact, they should be in a position where they can make suggestions. Law firms have a lot of experience with major companies’ in-house teams, and without disclosing anything confidential, they have it in their power to make best-practice suggestions.”
To this end, Malhotra is keen on secondments, which, as well as being a way of reducing fees, “provide firms with greater insights into our business”. Ultimately, he argues that “the panel process is a complicated one, based on risks, capability, experience and questions of how firms charge, and whether they’re willing to be innovative in their charging”.
Another objective of the review is consolidation: fewer firms will emerge at the end of the process. Malhotra is unable to confirm how long the panel firms will be retained for, but says InBev wants the relationship with the successful firms “to be a longstanding one”.
As well as relationships with the likes of DLA Piper Rudnick Gray Cary and Simmons & Simmons in the UK, InBev also uses local firms for smaller-scale work, such as Machins, a Luton-based firm that handles property work for the company near its UK headquarters.
M&A is an important part of InBev’s activities, and deals with such transactions as the company’s sale of its Coca-Cola bottling works in Germany last July for e137m (£93.7m), or its e70m (£47.9m) stake in Spain’s Damm brewery last August.
Much of Malhotra’s work at a behemoth the size of InBev involves steering a perilous course through antitrust and competition law. “Antitrust is very big for us,” he says. “We want to raise awareness of antitrust laws throughout Europe and are rolling out a programme across Western Europe to do that.”
Other key areas are the drafting of contracts with suppliers (everything from IT to yeast), defending the company from cross-border litigation such as the current IP trial taking place in Germany, the Netherlands and Belgium, and risk management.
“Risk doesn’t operate in a vacuum,” says Malhotra. “Business is all about trading and there are a number of functions involved in trading activity. Our responsibility as a legal function is to ensure that all of these functions – sales, marketing, distribution and so on – are acting in a joined-up way. It’s about managing upwards, sideways and downwards.”
Separate from the panel review, the legal heads of each of the company’s five zones (Western Europe, Central & Eastern Europe, North America, South America and Asia Pacific), as well as the general counsel for corporate, have also been meeting regularly since last year. The idea behind these meetings, according to Malhotra, is to develop a global legal business plan and ensure “joined-up thinking”, as well as to look at how InBev “can leverage best practice in each zone so [it] can move forward globally”.
Chaired by Malhotra, the six legal directors of the countries that make up the Western European zone also meet four times a year and this week will converge in Bremen, Germany. The UK’s representative will be Lesley Shaw, formerly of the RAC.
Although the panel review is expected to be completed imminently, Malhotra refuses to give anything away. So law firms will have to wait just a few more weeks before toasting their successes.
Turnover (worldwide): e8.57bn (£5.83bn) (as at 2004)
Employees (worldwide): 77,000 (as at 2004)
Legal capability: 40 lawyers, 30 paralegals
General counsel, Western Europe: Deepak Malhotra
Reporting to: Global general counsel Sabine Chalmers and Western Europe zone president Stefan Descheemaeker
Main law firms: DLA Piper Rudnick Gray Cary and Simmons & Simmons
General counsel, Western Europe