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The UK's Competition and Markets Authority (CMA) has launched an inquiry into Diageo's purchase of British gin and vodka maker, Chase Distillery, due to competition concerns.

Diageo's agreement to purchase Chase Distillery for an undisclosed sum was initially announced in October 2020. Chase Distillery's spirits portfolio is composed of seven gins, four vodkas and an elderflower liqueur, and Diageo pursued a deal for the firm to expand its position in the premium spirits category.

The CMA announced that a Phase 1 investigation has been launched into the merger, whereby the CMA will consider whether the deal constitutes a "relevant merger situation" under the provisions of the Enterprise Act 2002.

The investigation aims to determine whether the merger will result in a “substantial lessening of competition within any market or markets in the UK for goods or services”.

Comments from interested parties are invited by the CMA and should be provided to the competition watchdog by 21 January 2021. The CMA will announce whether it has decided to refer the merger for a Phase 2 investigation on 4 March 2021.