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 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.”
September’s Milk Price Review shows only one better price over the previous month – a 0.1p/litre rise on constituents on Dairy Crest’s Manufacturing Agreement.
But there are five cuts – Wiseman Dairies and Arla Foods both reduced their base price by 0.35p/litre; Golden Vale cut payments by the same amount through various contract changes.
Midlands Co-op decreased its base price by 0.3p/litre, while Milk Link cut by 0.1p/litre through its business market related adjustment.