UK competition officials have launched a probe into Diageo's purchase of what is in effect a controlling stake in Whyte & Mackay owner United Spirits by issuing an "invitation to comment".
The Office of Fair Trading said it would investigate whether the deal signed between the Johnnie Walker owner and Indian tycoon Vijay Mallya would have a detrimental impact on the spirits market.
The focus is likely to be on United Spirits' Whyte & Mackay business, owner of brands including Jura and Dalmore. Diageo, behind the likes of Buchanan's and Lagavulin, is the world's biggest Scotch whisky producer.
The OFT will consider whether the combined company will have an excessively dominant position in the UK market.
A key issue in the competition decision will be whether Whyte & Mackay's own-label whisky production is viewed as being in the same category as Diageo's low-end Bell's whisky brand.
At the beginning of this month Diageo has spent £344 million to acquire another 14.98% stake in Vijay Mallya's United Spirits business.
This took its stake to 25% after it earlier acquired a 10% stake in the Indian drinks giant through the issuing of new shares. With a voting agreement, Diageo has control of the business.
It had intended to take a majority stake but this was stymied by a surge in United Spirits' share price above Diageo's open offer bid.
The Office of Fair Trading said any representations should be made by August 2.
The OFT has 40 working days to come to a conclusion. It can opt to clear the merger or it could ask the companies to agree to sell offer certain brands or businesses.
If it regards neither of these options as being possible then it can opt to refer the merger to the Competition Commission for a more thorough investigation.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article