The Competition Tribunal has indicated its opposition to the merger between liquor giants Distillers Corporation (SA) Ltd and Stellenbosch Farmers Winery Group Ltd saying that the move would reduce competition in the spirits market.

The tribunal said in a statement on Thursday that the formation of the new company - Distell Ltd - "is likely to cause a substantial lessening of competition" in the market for medium priced brandy, whisky, gin, vodka and cane brands.

"Distell enjoys a very significant share of this market and barriers to new entry are extremely high," the tribunal said.

"A further hearing will be convened for the purpose of determining an appropriate remedy. Any potential remedy imposed, whether behavioural or structural, will be confined to that market in which the panel has determined that there is a likely to be a substantial lessening of competition," it said.

The tribunal said the reasons for its decision contained confidential information but that it had handed the reasons to Distell and to the Competition Commission.

The tribunal is an independent, statutory body that regulates mergers and adjudicate on anti-competitive business practices. It hears appeals on the Competition Commission's decisions on intermediate mergers - Sapa.