UK regulator red-flags Heineken's acquisition of Punch Tavern pubs

The UK competition watchdog has raised concerns that brewery giant Heineken's acquisition of about 1,900 pubs from Punch Taverns could cut competition in 30 areas across the UK.

According to the Competition and Markets Authority (CMA), the Amsterdam-based brewer now needed to come up with proposals to address these concerns by 20 June 2017 or face an in-depth investigation into the merger.

This could include selling off some of its own pubs or reducing the number it bought from Punch Taverns.

Under an initial investigation the CMA had looked in detail at areas where pubs operated by Heineken and Punch competed and had identified 33 areas where their pubs would not face 'sufficient competition' after the merger, which could lead to see price increases or quality of the service on offer.

Concerns had also been raised with the CMA that a merger would close off an important route to market for brewers that competed with Heineken.

The watchdog found however, that the pubs being acquired were only a very small part - 4 per cent of the UK market - and not a major route to market for brewers.

The CMA also considered whether the acquisition by Heineken could lead to a reduction in the choice of beer and cider being offered at Punch pubs.

The brewing giant said it would address the CMA's concerns.

"This decision by the CMA acknowledges that there are only a small number of local areas where competition may be diminished due to our acquisition of the pubs," said David Forde, managing director for Heineken UK, BBC reported.

"We are confident we can offer the CMA suitable undertakings to satisfy their concerns."

The CMA also felt that Heineken would not reduce the choice of beer and cider available in the Punch pubs, as this could cause business losses.