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UK's competition watchdog mulls Slug and Lettuce pub owner's takeover of Ei Group

The proposed deal would result in Stonegate taking control of some 4,000 additional pubs in the UK
The proposed deal would result in Stonegate taking control of some 4,000 additional pubs in the UK

The UK's competition watchdog said it has started an investigation into whether the potential merger of pub owner Stonegate and larger rival Ei Group would erode competition. 

The proposed deal would create Britain's biggest pub operator. 

The Competition and Markets Authority (CMA) said it has begun its phase 1 investigation following the European Commission's decision to refer the case to the UK. 

The move comes as the country's hospitality sector has been rocked by the closure of a number of major restaurant chains this year.

UK pub operators are also battling the cost of higher minimum wages as well as dampening consumer confidence due to uncertainties surrounding Brexit. 

The CMA also said it was inviting comments as to whether the £1.27 billion merger would lead to lessening of competition in the UK.

The deal would result in Stonegate taking control of some 4,000 additional pubs in the UK. 

Stonegate and Ei declined to comment on the CMA's decision to investigate their deal. 

Stonegate, which is owned by private equity fund TDR, is best known for its Walkabout, Yates and Slug and Lettuce chains. 

In contrast, Ei runs a disparate range of pubs, often in partnership with landlords and small operators, who tailor their menus and entertainment to cater to local customers.