Dairy Crest will complete the £80 million sale of its dairies division to Müller in December following approval from the Competition and Markets Authority (CMA).
The CMA announced it has accepted modified undertakings provided by Müller and approved the sale of the dairies operation. It will complete on December 26 this year.
The consideration payable by Müller remains at £80 million subject to upward or downward movement. Dairy Crest has agreed to pay £15 million to Müller on completion of the deal to help meet the additional cost of the undertakings.
Defra secretary Elizabeth Truss said the sale would provide better stability to the dairy market.
“It will also allow Dairy Crest to focus on growth in its cheese and spreads business in the UK, and innovative new products for export to high-growth markets," she said.
Mark Allen, Dairy Crest chief executive said: “We are delighted that the sale is now confirmed and will complete this year.
“This is a transformational moment for Dairy Crest and the wider dairy industry. The deal will help to create a more sustainable UK dairy sector.
"It will deliver economies of scale and cost efficiencies that will underpin investment in the sector and help the UK to compete more successfully in global markets."
The ’modified undertakings’ include an agreement Müller will provide for the expansion of Medina Dairy in the South West and Wales, within the catchment area of Dairy Crest’s Severnside dairy. The CMA found concerns about the supply of fresh milk in the region.
Müller agreed to sell the option for Medina to process a maximum of 100 million litres of milk Severnside to supply national retailers for between five and eight years.
The CMA claimed with this financial backing Medina was in a position to expand and continue to invest in the region.
Sheldon Mills, CMA Senior Director of Mergers and decision-maker in this case, said: "The dairy processing industry has faced a number of significant challenges in recent years and we believe that this outcome is good for the dairy industry and the retailers.
"The remedy addresses in a clear-cut manner the competition concerns we had with the merger in especially the South West and Wales regions."