UK: Diageo looks to sell 'bulk' of Whyte & Mackay after OFT ruling
Diageo has offered to sell Whyte & Mackay, the OFT says
Diageo has offered to sell the "bulk" of Whyte & Mackay after the UK's Office of Fair Trading (OFT) concluded that its acquisition of the Glasgow-based Scotch producer could lead to a "substantial lessening" of competition in the whisky market.
In an announcement this morning (25 November), the OFT said that it is considering Diageo's offer to sell Whyte & Mackay's (W&M) central operations, as well as its Invergordon, Jura and Fettercairn distilleries. The OFT has subsequently suspended a move to refer the merger to the Competition Commission.
Diageo, which hopes to keep hold of W&M's Dalmore and Tamnavulin distilleries, effectively aquired Whyte & Mackay after it took majority control of the Scotch producer's parent company, United Spirits, in July.
The OFT said that, following a four-month investigation, it found that the merger "may lead to a substantial lessening of competition in the supply of blended whisky to retailers". The body flagged that Diageo's Bell's whisky brand and W&M's own-label and branded blended whisky are competitors in the UK retail sector.
A "number" of retailers voiced concerns to the OFT about possible price rises for bottled blended whisky sold in the UK as a result of the merger, the competition authority said.
Chris Walters, the OFT's chief economist said: "These companies are two of the leading suppliers of blended bottled whisky in the UK, especially to supermarkets and other large retailers.
"Our investigation considered a wide range of evidence and we concluded that the likely loss of competition could give rise to higher prices for retailers, and ultimately consumers.
"We are now considering Diageo's offer to sell the bulk of the Whyte & Mackay business with the exception of two malt distilleries, to address our concerns."
When contacted by just-drinks, a spokesperson for Diageo said: "Diageo will be assisting the OFT with its on-going work. A further announcement will be made in due course and we are not in a position to comment further at this stage."
To read the OFT's statement, click here.
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