A review of the proposed merger of UK housebuilders Barratt Developments plc and Redrow plc has identified competition concerns in one area of the country.
In a detailed Phase 1 investigation into the £2.5bn deal, the Competition and Markets Authority (CMA) found that both housebuilders currently hold a high combined share of land around a Barratt development in Whitchurch, Shropshire.
As a result, the regulator said that if the merger goes ahead it could lead to higher prices and lower quality homes for homebuyers in this area, which includes nearby towns such as Nantwich, Ellesmere and Market Drayton.
The deal did not raise UK-wide competition concerns, with the CMA concluding that in the rest of the country, nationally and in all other overlapping local areas, the merged business will continue to face competition from rivals including other large and smaller regional housebuilders.
Barratt and Redrow have been invited to submit proposals which address the CMA’s concerns in the Whitchurch area, to avoid the deal moving to an in-depth Phase 2 review.
“Prospective homebuyers must not be disadvantaged as a result of deals like this one — with the potential loss of competition leading to even higher house prices or lower quality homes,” said Joel Bamford, executive director for mergers at the CMA.
