Two weeks ago the Competition and Markets Authority announced that because of the scale of both companies, they planned to investigate the merger further to see if the proposed £80m sale could cause higher fresh milk prices for retailers and shoppers.
Now the CMA has said there are “reasonable grounds” for thinking the proposals could avoid the six-month inquiry announced.
The deal comprises of Dairy Crest’s fresh milk, cream, flavoured milk including the FRijj brand, bulk butter and milk powder businesses.
NFU dairy board chairman Rob Harrison said: “While we were expecting this decision to go to Stage Two, we have throughout the process fully supported the sale of Dairy Crest’s dairy operations to Muller UK and Ireland. The Competition and Markets Authority need to do more detailed analysis. However in reality, after the merger, Muller will still be less than 30 per cent of the liquid market and the average price for four pints of milk is at the lowest we’ve seen since May 2006 and falling. In recent years we have seen more industry consolidation, due to the unsustainable lack of profitability of both farmers and processors.
“What will benefit the whole dairy supply chain from farmers to consumers is an innovative, efficient, highly invested and productive sector. To ensure this can happen we need each part to be profitable so that consumers can continue to enjoy high quality British dairy products long into the future.”