The press photography agency Getty Images has withdrawn its plans to buy its rival Rex Features after the Office of Fair Trading (OFT) referred its proposal to competition commissioners.

After two months of investigation, the OFT expressed concerns that the purchase would enable the new enlarged company to raise prices for buyers of its photographs.

The regulator argued that there was a need to rule out any "substantial" impact of the purchase on competition.

Amelia Fletcher, senior director of mergers at the OFT, noted that a number of publishers - the key customers in the press photography market - were concerned about the consequences of the deal.

Getty Images disputed the OFT's proposition, but nevertheless pulled out of the deal. It said a full investigation may distract both parties who wished to focus on the production and delivery of high-quality services to their customers.