Costcutter Supermarkets and Nisa Today's are no longer progressing with their merger.

The merger has been called off because the Nisa board could not recommend the offer to its members due to uncertainty created by allegations made to the Office of Fair Trading. The allegations, which have received wide publicity, were made by dissident members of Scunthorpe-based Nisa, who claimed that the link-up with York group Costcutter would have created a cartel.

Mutually-owned Nisa Today’s is the UK’s largest buying group for independent retailers, acting as a co-operative using its collective buying power to negotiate deals with suppliers.

Kaupthing, the Icelandic bank which was funding the deal, withdrew its financing for Costcutter’s offer. Costcutter will continue to work with Nisa as a business partner.