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Match referee Simon Hooper pointed to the spot at Anfield on Sunday afternoon when Jota went down after a sliding tackle from Wolves defender Emmanuel Agbadou.
However, the video assistant referee John Brooks and assistant video assistant referee Adam Nunn overturned the on-field decision.
As explained by the Premier League Match Centre: "VAR checked the referee's call of penalty to Liverpool for a challenge by Agbadou on Jota and deemed any contact was not initiated by Agbadou, therefore recommended an on-field review.
The referee overturned the original decision, and play restarted with a drop ball."
Webb, the PGMOL chief refereeing officer, also reflected on the call during the latest edition of Match Officials Mic'd Up.
He said: "Good use of VAR to overturn a quite clearly incorrect on-field decision.
"I think many people thought this was a penalty at full speed.
It's not a penalty kick and, therefore, recommended a review.
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"So, exactly what the VAR should do, change that pretty crucial on-field decision that was incorrect and make it right.
I think the officials got really focused on the need to overturn the penalty.
"Our advice to them will be, obviously, when they go to the screen, it's not just about overturning the on-field decision; it's looking at all aspects of it.
"Diogo Jota acts in a way that's meant to deceive the referee here, simulation, and, therefore, a yellow card should have been issued."