Fears that the acquisition by Pan Fish of Marine Harvest will push up Scottish salmon prices have triggered its referral to the Competition Commission.

Industry sources told The Grocer there was concern among buyers of Scottish farmed salmon "that too much supply would be in the hands of too few".

The OFT points out in its referral that the two companies are the two largest suppliers of farmed Atlantic salmon in the European Economic Area.

Vincent Smith, the OFT's director of competition enforcement, said: "The OFT has found that the loss of rivalry between these companies may cause an increase in the price of farmed Atlantic salmon, and thereby harm UK consumers. In addition to this, we found that any effects were likely to be felt more acutely among consumers having a strong preference for Scottish salmon."

The OFT also flagged up concerns that Scottish suppliers would be placed at a disadvantage to their international rivals.

The industry source said: "You have to remember that Pan Fish and Marine Harvest together would control 50% of EU production. Additionally, 90% of the UK smoked market comes from Scotland, and it is difficult to switch supply with that product."

However, the source indicated that it was unlikely that Pan Fish would offer cheaper prices for product from its Norwegian operations than from its Scottish farms: "I can't see how they would get away with it."

Pan Fish also has a commitment to contract supply rather than spot purchasing. Contract supply provided lower prices in the long run than spot purchasing, the source said.

Pan Fish has said it will take the lowest-cost producer position through the merger worldwide and is ideally placed to achieve this through the synergies of a consolidated operation.