South Africa's Competition Commission approved Heineken's purchase of wine and cider company Distell Group as long as the merged entity invests more than 10 billion rand ($578 million) over five years in the country.
The Commission said on Friday the investment would be to maintain and grow the aggregate productive capacity of its operations and related facilities in South Africa.
The Dutch brewer announced in November its planned purchase of Distell and Namibia Breweries Ltd to form a southern African drinks group worth €4 billion ($4 billion).
The Commission recommended that the Competition Tribunal, which makes the final decision, approve the merger subject to conditions.
This is because it found that the proposed transaction is likely to substantially prevent or lessen competition in the relevant markets as the merged entity will be a dominant supplier of flavoured alcoholic beverages, with a market share above 65% and would be the largest supplier of ciders in South Africa.
"To address the competition concerns arising from the transaction, Heineken has committed to divest its Strongbow business in South Africa and other SACU (Southern African Customs Union) countries," the Commission said.
News by Reuters edited by Donna Ahern, Checkout. For more drinks stories click here. Click subscribe to sign up for the Checkout print edition.