Merger Regulation, Firms, and the Co-Evolutionary Process: An Empirical Study of Internationalisation in the UK Alcoholic Beverages Industry, 1985-2005

We present an historic industry study of the consolidation of the UK alcoholic
beverages firms to inform debates in organisation studies relating to co‐evolution
and the dynamics of internationalisation. We distinguish behavioural and
structural co‐evolutionary factors in firms’ strategic intent, mirroring the two
types of remedies that competition authorities can impose on merging firms. We
test this theoretical construct in an empirical investigation of the consolidating
UK alcoholic beverages firms between 1985 and 2005. In this era Diageo was
formed from the landmark merger of Grand Metropolitan and Guinness.
Subsequently Diageo acquired the former international spirits empire of Seagram
in partnership with a major competitor. Successful implementation of Diageo’s
merger strategy owed much to an ability to navigate the evolving multijurisdictional
co‐ordinated oversight of cross‐border mergers and acquisitions.
The formation of novel deal structures as well as co‐operation with competitors
to circumvent policy intervention were significant co‐evolutionary mechanisms
that have featured more generally in subsequent international mergers as others
have copied these deal structures to achieve similar regulatory outcomes.