Dairy companies serving the British cheese market, including Avonmore Waterford, have called for a Monopolies and Mergers Commission inquiry into the decision by milk supplier, Milk Marque, to move into the cheese processing business.

Along with other members of the British Dairy Industry Federation (DIF), Irish food group Avonmore Waterford is against the move by Milk Marque. Avonmore Waterford has about 20 per cent of the British cheese market and about 14 per cent of the British liquid milk market.

The DIF has described Milk Marque's move as "an additional abuse of power", arguing that the move would push up milk prices and give advantages to the Milk Marque processing plant. Milk Marque is a co-operative set up as the successor to the Milk Marketing Board to buy milk from farmers and sell it to the industry. It controls about half of British milk supplies.

This week it announced that a subsidiary, Milk Marque Developments, had acquired a cheese processing operation in south Wales. The move by Milk Marque is part of its recently-announced strategy to move into processing to use up surplus milk and halt falling milk prices. Milk Marque plans to process about 15 per cent of its own milk supplies by 2000.

Food industry analysts said the acquisition, at just under £10 million sterling, was a small one. One analyst said the big players in the British cheese market were not taking it "hugely seriously". But he said that, if Milk Marque continued to make inroads into the processing sector, it could drive up the price of milk for producers in the medium to longer term.