UK watchdog probes Diageo’s deal to buy Chase

The UK’s Competition and Markets Authority has started an investigation into Diageo’s planned purchase of English spirits producer Chase Distillery.

In October 2020, Smirnoff vodka and Gordon’s gin owner Diageo agreed to acquire Chase Distillery for an undisclosed sum. Herefordshire-based Chase Distillery was founded in 2008 by William Chase.

The single estate producer’s portfolio includes seven gins, four vodkas and an elderflower liqueur. Chase also recently moved into hard seltzers with the launch of a gin-based range.

The deal was expected to close by early 2021 subject to regulatory authorisation.

However, the Competition and Markets Authority (CMA) published a notice of its intention to inspect the deal on 7 January.

The CMA said it was considering whether the transaction, if completed, will result in the creation of a relevant merger situation under the Enterprise Act 2002 and, if so, whether that move could result in a significant fall in competition within any markets in the UK for goods or services.

To assist the investigation, the CMA is inviting interested parties to submit their comments on the agreement by 21 January 2021.

The CMA has until 4 March to make a decision on the inquiry and whether it will move forward to phase two.

A Diageo spokesperson said: “We are engaging with the CMA to ensure that it can conclude its enquiries as quickly as possible.”

According to IWSR 2019 data cited by Diageo at the time of the deal, the UK is the largest gin market in Europe and grew at a compound annual growth rate (CAGR) of 17.4% between 2014 and 2019.

The premium-plus segment is also growing at more than twice the rate of the total UK gin category, with a CAGR of 40% in the five years to 2019.

In August 2020, Diageo agreed to buy Davos Brands, which co-owns Aviation American Gin with Hollywood actor Ryan Reynolds, in a deal worth up to US$610 million. The acquisition was completed on 30 September.