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Britain’s Competition and Markets Authority has opened an initial investigation into Heineken’s £403m deal to buy up pub operator Punch Taverns.

Dutch brewer Heinenken agreed a deal to takeover Punch’s 3,350 strong portfolio of pubs in December last year, arguing it provided a “compelling strategic rationale” to enlarge its existing pub business.

On Thursday, the CMA said it had begun a phase one investigation into whether the merger would reduce competition and choice for UK pub-goers. The investigation will be completed on April 24, after which the authority will decide on whether to proceed with an “in depth merger investigation” lasting six months.

Should the Heineken deal go through, it would make the brewer the third largest pub group in the UK after Greene King and Enterprise Inns. The company already owns 1,100 leased and tenanted pubs through its Star Pubs & Bars division.

Heineken said news of the investigation was “fully expected”. A spokesman for the company said:

This morning’s announcement confirms an important and fully expected stage in the process to finalise our acquisition of the Securitisation A pubs from Punch and Heineken will be fully cooperating with the CMA.

Punch is the UK’s second-largest pubs estate by number of outlets. Its shareholders approved the deal last week.

Heineken shares were broadly unchanged on the news, inching up 0.3 per cent while Punch Taverns fell 0.7 per cent in early morning trading.

The Punch Tenant Network, which represent its UK publicans, has hit out at the deal over concerns that Heineken could fill its pubs with its own brands of beer and cider.

Chris Lindesay, coordinator of the independent group, said in January: Heineken’s aggressive bid for market dominance via their multinational balance sheet is wholly offensive to the principles that underpin the unique Great British Pub.”

Read more: Heineken’s Punch offer a gift for investors

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