Heineken (AMS:HEIA) have been warned by UK regulators over their potential merger plans with Punch Taverns (LON:PUB), amid concern over maintaining competition in local areas.
The Competition and Markets Authority (CMA) said it had located 33 areas where pubs would affect levels of competition, and hinder consumer choice following the deal.
Punch Taverns currently owns over 3,500 pub locations across the U.K, with Heineken set to acquire approximately 1,900 of these locations.
Heineken, which already owns 1,100 pubs across the UK, must submit plans to the CMA by 20 June or face further investigation.
Andrea Coscelli, CMA acting chief executive and a key figure in the case, said:
“We have listened very carefully to a range of concerns about this merger. The companies will own less than 10pc of all British pubs after any deal, but we are concerned about the loss of competition for pub goers in a number of local areas.”
The international brewer agreed back in January to a deal worth £403 million, alongside investment firm Patron Capital, which is contributing around £100 million of the agreed upon amount.
In response to the comments, managing director for Heineken UK, David Forde said the CMA’s findings exposed “only a small number of local areas where competition may be diminished due to our acquisition”.
Nevertheless, Mr Forde assured that the company would take the necessary steps to address the CMA’s concerns to ensure approval.
“We are confident we can offer the CMA suitable undertakings to satisfy their concerns,” he added.
Back in December, Punch Taverns had received three competing offers from Heineken, Patron Capital Advisers LLP and Emerald Investment Partners Limited, before deciding upon a final offer in January.
Should the acquisition be approved by UK regulators, this would make Heineken the owner of the the third largest UK pub group, just behind Greene King and Enterprise Inns.
Shares in Heineken are currently down 0.27 percent. Conversely, Punch shares are up 1.28 percent as of 14.22PM (GMT).