The Office of Fair Trading (OFT) decision to investigate the recent move by Robert Wiseman Dairies to purchase the fresh liquid milk business of Scottish Milk Dairies will do nothing to encourage the consolidation and development required to drive the dairy sector forward.

The £900,000 deal was referred to the OFT, who are responsible for regulating businesses to ensure they are fair and competitive.

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 Scottish market. However, the result may be that a sensible attempt at consolidation in Scotland may not go through or that the parties involved will have to spend significant sums of cash defending the deal which will ultimately impact on profitability.

"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.

"Any over-rigorous application of competition law, particularly in the liquid milk sector, seriously constrains the ability of businesses to develop commercially. It is also in contrast to other EU countries, where 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.

"The possible interpretation of Scotland as a regional market in its own right leads to acute constraints on the abilities of businesses here to develop. While logic points towards greater consolidation among milk suppliers, there is no confidence in the industry that this will be possible given the current attitude of the regulatory authorities.

"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."

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