Japanese dairy products group Snow Brand Milk Products has been hit by the news that compatriot trading house Itochu has decided to halt negotiations to merge their respective frozen food businesses.

The talks has already suffered one setback, when Itochu put the merger plans on ice in February to give Snow Brand time to recover from a scandal involving fraudulent mislabelling of beef.

The head of the Itochu frozen food arm, Yayoi, is quoted by the Nihon Keizai Shimbun as saying he was concerned the Snow Brand difficulties may spill over to Yayoi if they merged.

Itochu is believed to have agreed to tell Snow Brand in spring of next year whether it is willing to resume talks.