ANTIAGO -(Dow Jones)- Following opposition from Chile's antitrust office, Swiss food and beverage giant Nestle SA (NESN.VX, NSRGY) and local dairy products maker Soprole SA will step away from their planned joint venture, the companies said Tuesday.
The Chilean antitrust office, known locally as the FNE, said in March that it opposed the planned joint venture, which would have included the manufacture, retail and distribution of various dairy products under the DPA Chile moniker.
"The conditions needed to proceed with the merger process are missing," the companies said in a joint statement, adding that they won't be pursuing the matter further with Chilean authorities.
Chile's antitrust court was set to rule on the venture later this year.
Last month, the FNE rejected the joint venture in spite of measures established by the companies to offset any negative market effects.
The FNE said the operation will restrict free competition among dairy producers and increase consumer prices. Additionally, the FNE found the proposed mitigation measures inefficient and difficult to implement.
Nestle and Soprole announced the venture in November.
Fonterra Dairy Co-operative Group Ltd. has a 99.8% stake in Soprole, Chile's leading consumer dairy business, with around one-third of the total market.