A £1.4 billion deal to merge two of the UK’s biggest soft drinks companies stalled today after the deal was  referred to the competition commission.

The Office of Fair Trading (OFT) said it referred the proposed acquisition of Britvic by AG Barr for further investigation because it could not rule out the possibility of higher prices following a tie-up after surveys suggested Britvic's brands Pepsi and Tango were sufficiently close alternatives to Irn-Bru to raise competition concerns.

Barr and Britvic are two of the three main soft drinks players in the UK and offer a wide range of brands, including Orangina, KA, Rubicon, Irn Bru, Robinsons, Fruit Shoot, Tango and Pepsi.

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Amelia Fletcher, OFT Chief Economist and Decision Maker in this case, said: 'The soft drinks industry is an important one for many consumers in Great Britain. People spend over £9 billion each year on these drinks.

'This merger will see the UK market reduce from three to two main players. Our investigation has identified competition concerns relating to this deal with respect to Barr's Irn Bru and Orangina brands which could lead to higher prices for consumers.

"In addition, we could not rule out the possibility of further competition concerns arising from combining the overall Britvic portfolio of soft drinks with the entire Barr portfolio. We are therefore referring the merger to the Competition Commission for an in-depth investigation."