Allen & Overy (A&O) and Linklaters are awaiting a decision by the Italian competition authority that will determine which firm will grab the lion’s share of the work advising British American Tobacco (BAT) on its takeover of Italy’s Ente Tabbacchi Italiano (ETI).

The completion of the deal, a hard-fought contest between three consortiums, depends on the resolution of competition issues, since the e2.32bn (£1.65m) purchase of ETI means that BAT will hold 31 per cent of the Italian tobacco market. Prior to the purchase, BAT had only a 5 per cent share.

The European Commission (EC) has already stated that it will rule on the deal.

In this instance, Linklaters, as BAT’s main adviser in Europe (the tobacco company uses Herbert Smith in the UK), would retain the lead role on the deal.

However, a chance remains that the Italian competition authority could investigate the transaction. Such a decision would place A&O, BAT’s chosen law firm in Italy, as the main legal adviser.

Lawyers close to the deal said that the EC is understood to have already put a timetable in place for examining the takeover. BAT is expected to notify the EC in late August, potentially kick-starting a six-month investigation.

BAT is known to have a strong relationship with Linklaters competition partner Alec Burnside; as part of its longstanding relationship with A&O in Italy, BAT also works closely with partner Silvia D’Alberti on antitrust issues.

Stephen Walzer, BAT’s assistant general counsel in charge of regulatory affairs, who is also a member of the UK’s Competition Commission, is also believed to be taking a lead role in the ETI transaction.

The purchase of former state-owned ETI will propel BAT into the number two spot in the Italian market, behind the US’s Altria, which owns Philip Morris, maker of the Marlboro brand.

However, the deal could create tension between BAT and Altria, since ETI manufactures and sells the Marlboro brand of cigarettes.

A&O and Linklaters declined to comment