Diageo’s Turkish Unit Under Investigation by Competition Board

Turkey’s antitrust authority opened an investigation into Diageo Plc’s Mey Icki unit amid allegations that the raki maker abused its market dominance in the country.

Preliminary findings submitted to the Ankara-based competition board were deemed to be “serious and adequate,” justifying a probe, the regulator said on its website Tuesday. A representative for Diageo said Mey Icki will review the issues raised and respond within a required time limit.

The $2.1 billion acquisition of Mey Icki in 2011 has already presented challenges for Diageo. Two years after the deal, Turkey’s government enforced a law forbidding advertisements and restricting sales of alcohol. The U.K. company has also encountered difficulties in developing countries including China and India.

“This is a further episode in Diageo’s continuing saga of emerging markets setbacks,” said Martin Deboo, an analyst at Jefferies in London.

Diageo has fallen foul of regulators in Turkey before. In June last year, the competition board fined the company 41.5 million liras ($14.9 million) for breaching competition rules.

Mey Icki is Turkey’s foremost producer of raki, the milky aniseed spirit which many Turks consider their national drink. The country’s president, Recep Tayyip Erdogan, is not among them: shortly before the alcohol restrictions were introduced he spoke against the consumption of alcohol in the 99 percent Muslim country, and designated ayran, a yogurt-based beverage, as the national drink instead.

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