The Competition Markets Authority (CMA) had expressed concerns over the impact of the deal on the supply of milk in the catchment area of Dairy Crest's Severnside dairy.
But the watchdog has now approved a deal that will see the dairy firm process 100 million litres of milk a year for the Medina Dairy in the south west for up to eight years, easing competition and supply concerns.
Dairy Crest said it will pay Muller £15 million on completion of the deal to help meet the additional cost of the modified undertakings.
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