THE European Commission yesterday launched an in-depth anti-trust probe of the planned merger between Guinness and Grand Metropolitan.

The commission's inquiry is expected to focus on the dominant position the merger would create in the spirits markets of several EU countries and could result in the new company being forced to sell off some brands. The two companies later said in a statement they expected the merger to go ahead in about three months after the investigation. The US competition authorities also decided yesterday to launch an investigation into the merger, submitting a second request for information about the proposed deal.

Both US and European competition authorities are concerned that the combined company, GMG Brands, would enjoy a dominant position on the whisky market.

The regulatory pressure coincides with a game of brinkmanship waged by Mr Bernard Arnault, the chairman of LVMH (Louis Vuitton Moet Hennessy), who fiercely opposes the deal in its present form.

Mr Arnault, who has threatened to sever key links with Guinness and requested arbitration by the Paris-based International Chamber of Commerce, this week suddenly raised the heat with a share raid. On Tuesday, LVHM bought up 0.3 per cent of GrandMet, and without warning, two days later, the French company paid £792 million sterling to lift its share-holding to 6.29 per cent.

This made LVHM the largest shareholder in both of the would-be partners. "It is hard to read this as anything other than an attempt by Mr Arnault to stop the merger," said a spokesman for GrandMet.

Mr Arnault has put forward an alternative proposal to the merger, which would combine LVMH's spirits businesses with those of Guinness and GrandMet, while spinning off GrandMet's food businesses.