UK's OFT worried over Diageo-USL deal impact

UK's OFT worried over Diageo-USL deal impact

As UK’s fair trade watchdog OFT continues to probe Diageo’s purchase of controlling rights in United Spirits from India’s UB group, the regulator has released a 53-page report detailing concerns posed by this deal to competition in the British whisky market

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The Office of Fair Trading (OFT) had decided on November 25, 2013 to have a fresh look at the $2 billion deal, after Diageo offered to divest bulk of Whyte & Mackay (W&M) business to address anti-competition concerns posed by this merger.

“The focus of the competitive assessment is therefore on the incremental effect on competition of Diageo’s shareholding and the control this confers on Diageo. A significant number of third parties raised the concern that the parties would restrict the supply and/or increase prices of private label blended Scotch whisky,” the 53-page order of the watchdog said.

The regulator said that it “found that the merger gives rise to a realistic prospect of a substantial lessening of competition” and subsequently the merged parties offered an undertaking “to divest the entirety of the W&M business apart from two malt distilleries and the associated brands of those two distilleries.”

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