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United Spirits Ltd will have to part with its Whyte & Mackay business in line with the decision of the Office of Fair Trade in the United Kingdom to address its fair trade policy following the merger of the Indian spirits major with London-based Diageo Plc.
“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,” Chris Walters, OFT Chief Economist and decision maker on this issue.
Diageo, the world's largest maker of spirits and India's USL are both suppliers of spirits in the UK and across the world. In the UK, United Spirits' subsidiary, Whyte & Mackay, is primarily active in the supply of whisky but also owns and distributes other spirits, including vodka.
The parties are major suppliers of bottled blended whisky to retailers with Whyte & Mackay also being an important supplier of own-label blended whisky, the OFT said in a statement. “A number of retailers expressed concerns to the OFT about possible price rises for bottled blended whisky sold in the UK as a result of the merger,” the OFT said.
The OFT said it found evidence that showed other manufacturers did not have, and could not quickly reach, sufficient capacity to offset the loss of competition likely to result from the merger.
“While the undertakings in lieu are being considered, the OFT's duty to refer the merger to the Competition Commission is suspended,” Walters said.
United Spirits acquired Whyte and Mackay in 2007 for $1.2 billion by liquor baron Vijay Mallya. W&M has annual revenues of 200 million pounds and has sales of 3 million cases of legendary brands such as Dalmore, Isle of Jura, Vladivar vodka besides others.
