Britain today launched a consultation process into the merger of Vijay Mallya-owned United Spirits and Diageo, maker of the famed Johnnie Walker whisky, to ensure the deal does not violate any competition rules.
Diageo, the world’s largest producer of spirits and a major producer of beer and wine and owner of popular brands such as Johnnie Walker, Guinness and Smirnoff, acquired a 25 per cent stake in United Spirits earlier this month.
The Office of Fair Trading’s (OFT) “invitation to comment” process, which runs until August 2, is applied to all mergers involving companies in the UK and invites third party representations to analyse their impact.
“The Office of Fair Trading is considering whether this agreement has resulted in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services,” said the OFT, which is in charge of protecting consumer interests in the UK.
If its review raises questions over a possible negative impact of the deal on the spirits market, the case would then be referred to the Competition Commission here to look into possible remedies.
“This is standard procedure for all mergers passing through the UK,” an OFT spokesperson said.
The main area of concern is likely to be centred on United Spirit’s Whyte & Mackay whisky brand, because Diageo is the world’s biggest scotch company.