Competition watchdog clears Diageo-USL deal; calls it boon to branded liquor market
01 Mar 2013
The Competition Commission of India (CCI), which has all the while been apprehensive that the proposed acquisition of a majority stake in Vijay Mallya's United Spirits by UK-based Diageo Plc would kill competition, has finally ruled that the merger would in fact boost competition.
The fair trade watchdog on Tuesday approved Diageo's proposed acquisition of a majority stake in United Spirits for a total consideration of Rs11,166 crore.
"Diageo's acquisition of USL may give a boost to the premiumisation strategy...The combination may increase and improve consumer choice," CCI observed.
CCI said the combination is unlikely to have any appreciable adverse effect on competition in the liquor market in India. On the contrary, CCI said, it would inspire competition in the market for branded liquor
United Spirits and Diageo brands are currently present in different price spectrums in the spirits market and have negligible overlap between their products in each of the branded spirits segment, CCI noted.
"The proposed combination may bring new products and more variants of the existing brands at different price points which would ultimately enable the consumer to expand his choice set," it said.