Nestlé’s proposed $2.8bn takeover of US largest ice cream manufacturer Dreyer’s has hit a legal block as the US competition watchdog ruled against the deal.

The US Federal Trade Commission - which voted unanimously for an injunction to block the deal - said it would oppose the deal on the grounds it would eliminate competition and raise prices.

Director of the FTC’s competition bureau Joe Simons said: "The market for superpremium ice cream is already highly concentrated and this will reduce the number of significant competitors from three to two.”

However, simons added that the agency would not immediately file a lawsuit to block the deal and said further negotiations were still possible.

The enlarged group was set to be the clear market leader in the US, and rank on par with rival Unilever with an estimated 17-18% share of the global market.