It is the first MMC investigation into any part of the liquid milk industry, a market which has seen much concentration recently.
The Office of Fair Trading, announced the reference yesterday, said the deal 'raises competition issues in the supply of processed liquid milk in Scotland which merit investigation.'
The decision was taken after the OFT received complaints from other milk distributors, and in the light of the Government's recent decision to reform the milk marketing boards.
The SMMB is a statutory monopoly owned by farmers. As well as being the sole buyer of raw milk, it is a large milk processer and distributor, accounting for one-third of the Scottish market and more than 40 per cent in its lowland and mid-Scottish heartland. The purchase would significantly raise these percentages.
The sale was announced in January. The MMC, which has until 30 October to report, can recommend blocking it.
Commentary, page 23