The 2021 merger of milk processors Freshways Dairy and Medina Dairy is being investigated by the Competition and Markets Authority (CMA) to establish if that union could result in a substantial lessening of competition in the milk industry.

The two companies, both based in the south east of England but who buy milk from dairy farms across Wales, agreed a merger in July 2021 to create a £400m company processing 500m litres of milk annually.

But the CMA has now launched a formal ‘phase one’ competition investigation, inviting industry participants to comment on whether they thought the deal would reduce competition.

A deadline of March 30 has been set for the CMA to announce its decision on whether to refer.

When the merger plan was announced, Freshways Dairy and Medina Dairy said the move would help create a viable, long-term, fresh liquid milk business that could compete with the other large players in the UK’s dairy sector.

As suppliers to hotels, pubs, restaurants, coffee shops and other food-service customers, both companies were badly hit by the first pandemic lockdown and this had serious repercussions for farmer suppliers, including big milk price cuts, delayed payments and the dumping of milk.