The Competition and Markets Authority has ruled the £2.5bn merger between Barratt and rival housebuilder Redrow would likely result in a “substantial lessening of competition.”
In a statement published today, the competition watchdog said it would escalate its enquiries to a phase two investigation unless the companies could provide an acceptable solution to address competition concerns.
It said the in-depth probe would scrutinise the potential impact of the merger to ensure it doesn’t breach UK competition rules.
In the statement CMA said: “The CMA has decided, on the evidence currently available to it, that it is or may be the case that this merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.
“This merger will be referred for an in-depth, Phase 2 investigation unless the parties offer an acceptable undertaking to address these competition concerns.”
This comes after the CMA said in March it was looking into the merger over fears it may damage competition.
The newly merged group would be expected to build about 23,000 homes a year and make more than £7bn in revenue.
Barratt said in March the deal would create the UK’s largest house builder and would help accelerate the “delivery of homes this country needs”.
The CMA’s scrutiny of the Barratt and Redrow merger comes amid an investigation into eight major housebuilders, including the two firms, over allegations of sharing commercially sensitive information that could impact house prices.
This probe, launched in late February, targets some of the industry’s biggest players after evidence suggested they were exchanging confidential details, such as sales prices and buyer incentives.
The watchdog stated that such actions “prevented and distorted” competition, potentially influencing pricing decisions and the pace of new home construction.