A proposed £2.5 billion tie-up between two of Britain’s biggest housebuilders is set to be probed by the UK’s competition watchdog.
The Competition and Markets Authority (CMA) said it was investigating the proposed acquisition by Barratt Developments of rival Redrow.
The two major developers announced the deal in February.
They said it creates an opportunity to bring together two “highly complementary” companies and accelerate the building of “much-needed” homes across the country.
The combined group, set to be called Barratt Redrow, is expected to build about 23,000 homes a year and lead to cost savings of at least £90 million a year.
But the CMA said it was considering whether the merger would significantly reduce competition in the industry.
This can happen when two large companies combine, as it can lessen choice for customers and lead to higher prices or lower quality services.
The watchdog has the power to block a merger or enforce changes to address its concerns once it has investigated the potential risks.
The CMA has initiated the early stages of gathering information about the merger before launching a formal investigation.
Separately, the CMA is probing eight housebuilders, including Barratt and Redrow, following evidence that they may be sharing commercially sensitive information.
It raised concerns that it could be affecting the development of sites and prices of new homes.
Housebuilding in the UK needs “significant intervention”, the regulator stressed.