The National Farmers' Union (NFU) Scotland has slammed a decision to refer Robert Wiseman Dairies' proposed acquisition of Scottish Milk's fresh liquid business to the Competition Commission as "perverse" and "counterproductive"
Its comments came as Wiseman dramatically withdrew its offer after the Office of Fair Trading (OFT) referred the deal, saying it could lead to a "substantial lessening of competition in the supply of milk to middle-ground customers [independent retailers and small chains], in the Scottish central belt."
Wiseman has been the subject of earlier lengthy investigations relating to the Scottish milk market.
Willie Lamont, chairman of the NFU Scotland milk committee, said: "This deal concerns a fraction of the liquid milk market within Scotland and does not in any way threaten the competitiveness of the market.
"In other EU countries, businesses are regarded as operating in a European market and so, despite substantial regional and national market shares often as much as 90% they are not perceived as anti-competitive, he said.
"It seems perverse that they are apparently concerned over a local issue 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."
A source close to Robert Wiseman called the referral "ridiculous" as the purchase amounted to only 2% of the fresh liquid milk market in Scotland: "It's only a £900,000 deal anyway, so, by the time you look at the cost of responding to an inquiry like this, which could run into hundreds of thousands, it's just not worth it. Besides, after all that palaver with the regulators recently, I suspect that they just couldn't face it."
Vincent Smith, director of competition enforcement at the OFT, said: "This transaction would put the milk business of a rival dairy in and around Glasgow in the hands of Wiseman, the largest supplier of fresh milk in Scotland.
"As a result, middle-ground customers in the area of overlap could face higher milk prices."