The OFT is examining whether Diageos control of W&M will result in an anti-competitive situation

The OFT is examining whether Diageo's control of W&M will result in an anti-competitive situation

The UK's Office of Fair Trading (OFT) has confirmed it is investigating whether Diageo's purchase of a major stake in United Spirits, the parent company of Scotch whisky producer Whyte & Mackay, will harm competiton in the UK spirits market.

The authority has asked for written “third-party” comments over competition concerns by 2 August, while the full probe will be completed within 40 working days, starting from yesterday (22 July). An OFT spokesperson confirmed to just-drinks today that the focus of the inquiry will be Diageo's control of Glasgow-based Whyte & Mackay. 

A statement said: "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."

Diageo confirmed earlier this month that it was seeking clearance from the OFT over the deal

The OFT, which is regarded as a backstop for the more powerful Competition Commission, has three potential courses of action: clear Diageo's purchase of a major stake in United Spirits; work with Diageo and Whyte & Mackay on “undertakings” if there are competition concerns; or, refer the deal to the Competition Commission. 

The spokesperson said the deal is open to review if the UK turnover of the company being acquired is above GBP70m, or if the two companies have 25% of the “same goods or services supplied in the UK ... and the merger increases that share of supply”.

Diageo officially became the biggest shareholder in United Spirits, which owns Whyte & Mackay, earlier this month, bringing its total stake in the UB Group subsidiary to 25.02%.

Analysts Nomura said last year Diageo could look to sell-off Whyte & Mackay in the wake of the deal, with Gruppo Campari a possible buyer.