SOFT drinks giant Britvic's proposed merger with the producer of Irn Bru has been halted by the Government's watchdog for fair competition.
Shareholders at Britvic and AG Barr had agreed to join forces from January 30.
But the Office of Fair Trading (OFT) has delayed the merger while it probes the deal, which it says could result in a "substantial lessening of competition".
Britvic traces its origins to a chemist in Chelmsford in the mid-19th century, and its 15-acre factory in Westway, with Art Deco clock tower, is an iconic sight in the city.
Britvic confirmed there will be up to 500 job losses in the companies' combined 4,000-strong workforce as a result of a merger, but said no decisions have been made on exactly where the cuts will be.
At Britvic in Chelmsford, there are 131 employees.
"Any job losses in the city are clearly something we don't want to see," said Chelmsford city council leader Roy Whitehead.
"We've already seen the loss of HMV and Jessops and we are working to try and improve this with new businesses arriving soon.
"The physical presence of the Britvic factory is an important thing, but on the other hand the idea of the merger is to become more efficient and to strengthen the business so it could be a positive thing. We just have to wait and see."
Despite 99 per cent of shareholders voting in favour of the deal, the move has been put on hold by the OFT.
In a joint statement the companies said: "We have been informed that the OFT is extending the timetable for its decision on the merger as it has not yet completed its review.
"As a result, the timetable for the implementation of the merger is being extended and the anticipated effective date of the merger will no longer be January 30, 2013, as previously announced."
Gerald Corbett, Britvic non-executive chairman, had seen the deal as an opportunity to create a "world class soft drinks company" which will have estimated annual sales of more than £1.5 billion.
He said: "The combination makes huge commercial and industrial sense, bringing together a host of iconic brands from Robinsons squash to Irn-Bru, as well as from the strong stable of Pepsi beverage brands, with very little overlap.
"A.G. Barr and Britvic are a fantastic fit with complementary strengths in products, channels and geographies and we will benefit from very significant synergies.
"Together we will create a bigger, better and stronger business for our consumers, customers and shareholders for now and the future."
