Robert Wiseman Dairies has pulled out of a deal to buy the fresh milk business of Scottish Milk Dairies.

The move follows a decision last week by the Office of Fair Trading to refer the £900,000 acquisition to the Competition Commission because of concerns it could push up milk prices to middle ground customers in the Glasgow area.

A Wiseman spokesman said defending its position would cost “many hundreds of thousands of pounds” and simply wasn’t worth it given the relatively small size of the purchase. “It just doesn’t make sense.”

NFU Scotland reacted angrily to the OFT’s ruling. Willie Lamont, chairman of the union’s milk committee, said: “The last thing dairy producers need right now is another example of the UK competition authorities hindering the successful operation and development of the dairy sector.

“It seems perverse that they are apparently concerned over a local issue affecting a small percentage of the Scottish milk market when they should be concentrating on the real problems within the supply chain – something they patently failed to address in their recent audit of the retailer code of conduct.”