Guinness may hive off spirit brands

Guinness and Grand Metropolitan look set to hive off some of their best- known spirits brands in the latest attempt to clear their proposed pounds 23bn merger with the European Commission.

The two drinks giants are understood to be preparing to offer concessions to the EC's merger task force in a bid to clear the final regulatory hurdles. Karel van Miert, the EC competition commissioner, is thought to have serious concerns about the power the combined group would have over the European spirits market and its ability to dictate terms to drinks retailers.

The merged company, to be called GMG Brands, would have more than 40 per cent of the Scotch whisky market in several European countries. GrandMet and Guinness are already the world's first and second largest spirits suppliers, with brands such as Bell's whisky, Gordon's gin and Smirnoff vodka. A final decision by the EC is due on 27 October.

Earlier this month the companies put forward a vigorous defence of their plans at two days of private hearings in Brussels after receiving a formal letter of objections from the EC. In this first phase of the negotiations the drinks groups have stopped short of offering any significant alterations to the deal.

But sources close to the discussions said Guinness and GrandMet were preparing to shift their approach in the next few weeks and offer concessions which they hope will satisfy the EC. "From now on it's for GMG to come up with concessions, rather than the merger task force," said the source.

Another industry source said: "GrandMet and Guinness know they may have to make concessions. They are drawing up plans to dispose of some of their brands if that is what it takes to get the merger through."

Some analysts believe that GMG Brands will have to give up at least one of its whisky brands in Europe to receive the green light from the EC competition authorities. Brands such as Dewar's, White Horse and VAT 69 could be sold, which would still leave the company with leading names such as Johnnie Walker and Bell's.

The EC is also concerned about the dominance the group will have over the European white spirits market and it may be required to sell off leading gin brands such as Bombay.

Drinks rivals Allied Domecq, Irish Distillers and Seagram are believed to have submitted their formal objections to the EC, with fears that the merger will give Guinness and GrandMet a virtual monopoly in certain markets such as Spain, Germany and the Benelux companies.

GMG could also have to give up brands in North America to clear the deal with the US Federal Trade Commission. Seagram, the Canadian drinks giant, claimed the deal would give GMG Brands a 75 per cent share of the US scotch whisky market. Analysts believe GMG Brands is preparing to dispose of some of its smaller brands such as Scoresby, Crawford and Ushers, which together account for 15 per cent of its US scotch sales.

Even if the EC and FTC are prepared to accept concessions, the company will have to overcome the challenge of Bernard Arnault, head of French luxury goods group LVMH, who is trying to scupper the merger.

A Guinness spokesman said talks with the EC were confidential.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Lou Reed distorted the truth about his upbringing, and since his death in 2013, biographers and memoirists have added to the myths
musicThe truth about Lou Reed's upbringing beyond the biographers' and memoirists' myths
Ed Miliband received a warm welcome in Chester
election 2015
Life and Style
Apple CEO Tim Cook announces the Apple Watch during an Apple special even
fashionIs the Apple Watch for you? Well, it depends if you want it for the fitness tech, or for the style
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own