Kerry Group's proposed €165 million acquisition of Breeo Foods has been blocked by the Competition Authority.
The authority said that it had decided to prohibit the deal on the grounds that it would "substantially lessen competition" in the Irish food market.
Both companies are involved in distribution of consumer foods such as cooked meats, cheese, spreads, chilled juice, fresh dairy products and pre-packed sandwiches.
The decision was made by the Competition Authority in accordance with section 22(3)(b) of the Competition Act 2002.
Breeo, which is owned by Reox Holdings, includes the Dairygold, Galtee, Shaws, Roscrea, Mitchelstown, Calvita and Sno brands. The acquistion also includes Breeo Foods's chilled-foods distribution service.
The Competition Authority's ruling follows a full investigation by the Authority's Mergers Division.
It is only the third time that the Competition Authority has blocked a proposed merger since the provisions of the Competition Act regarding merger control came into effect in January 2003.
Reox Holdings said it was disappointed by today's decision but said it would continue to build on Breeo's position in the market.
"We are naturally disappointed at the Competition Authority decision as we believe that the sale of the business to Kerry Foods was a good proposition for the Breeo business, its shareholders and staff, Irish consumers and the consumer foods market in this country. We will review the detail of the Competition Authority's decision over the next number of days," said Reox chairman Flor Riordan.