Drinks giant Diageo is to offload most of its whisky business Whyte & Mackay amid fears that its continued ownership could drive up prices for drinkers.

The sale offer comes after retailers complained to the Office of Fair Trading (OFT) that Diageo's acquisition of United Spirits last year resulted in two of the UK's leading blended bottled whisky brands coming under the same owner.

The OFT's investigation said there was "substantial competition" in the retail sector between Bell's whisky, a Diageo label, and Whyte & Mackay's own-label and branded blended whisky.

OFT chief economist Chris Walters said: "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."

The OFT is now considering Diageo's offer to sell the bulk of the Whyte & Mackay business with the exception of two malt distilleries, Dalmore and Tamnavulin.

The undertakings cover all of Whyte & Mackay's blended Scotch whisky brands as well as its private label operations. Whyte & Mackay will retain its malt distilleries at Jura and Fettercairn and the Invergordon grain distillery.

Diageo and United Spirits are both suppliers of spirits in the UK and across the world. In the UK, United Spirits' subsidiary, Whyte & Mackay, also owns and distributes other spirits, including vodka.