The UK's Competition and Markets Authority (CMA) has "accepted in principle" a revised offer from German dairy giant Muller for Dairy Crest's liquid milk business, the company said.

The UK competition regulator had flagged a number of competition concerns that would arise from the deal, which would see Muller take control of Dairy Crest's dairies division. To address these concerns – and avoid a more detailed phase two investigation – Muller said that it would undertake to "toll process" a nominated volume of fresh liquid milk for a particular customer in South Wales. This will allow the purchaser to compete for tenders in the south west, Wales, the south and the Midlands, Muller said.

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Ronald Kers, chief executive of Muller, said: "We strongly believe that this transaction will unlock real benefits for customers, consumers and farmers. We are pleased that the CMA has responded promptly to our proposals which aim to fully address the concerns which they expressed and look forward to a positive outcome."

Mark Allen, Dairy Crest CEO, echoed the sentiment: "We have always believed the sale of our Dairies operations is good news for the whole UK dairy sector at a time when it faces significant challenges. We welcome today’s developments and the potential for a swifter completion."

The acceptance in principle by the CMA of proposed remedies to address competition concerns over the deal triggers a 15 day public consultation, with a final decision to be announced in 40 working days.

Should the acquisition be approved after this period, Muller said it would aim to complete the transaction by the end of the year "at the latest".

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Shore Capital analyst Clive Black said that the CMA's decision was "good news" for the merger. "Should this deal eventually go through though, we believe that it will be a sound outcome for the sustainability of the liquid milk production in the UK and so the fortunes of British dairy farmers and milk consumers alike; retail milk prices to our minds are unsustainably low for a product that requires such care and capital to reliably deliver to supermarkets," he suggested.

"We also believe that approval of any such deal will be a good outcome for Muller-Wiseman‎, which is expanding its reach into the UK market, most recently in the butter cabinet, and Dairy Crest."