Barratt Developments PLC's (LSE:BDEV) agreed £2.5 billion acquisition of Redrow PLC (LSE:RDW) has raised competition concerns for the UK antitrust watchdog, though just in one local area.
The concerns for the Competition and Markets Authority (CMA) are around four Barratt developments in Whitchurch, Shropshire, between Wrexham and Stoke-on-Trent.
As the CMA found both housebuilders hold a "high combined share" of land in the surrounding area, such as Redrow’s development at Kingsbourne in Nantwich, it has asked the pair to submit proposals that address these concerns to avoid the deal moving to an in-depth 'Phase 2' review.
Overall, the CMA said the merger does not raise national competition issues in the other 400-plus areas where the two companies overlap.
Barratt and Redrow have until 15 August to offer undertakings to the CMA to address its concerns over Whitchurch.
Barratt said the companies "intend to engage with the CMA with the objective of agreeing suitable undertakings", and have already identified a solution it believes will address the concerns.
While the area contains four Barratt developments, the FTSE 100 company noted that Redrow's nearby development has "fewer than 10 plots remaining to sell", so it will propose to "address the future conduct of sales and build on the Redrow site" and so does not expect that any land will have to be sold.
Joel Bamford, CMA executive director for mergers, said: "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."
Barratt boss David Thomas said he was "pleased that the CMA has found there would be no harm to competition in all but one of the areas in which Barratt and Redrow overlap" and remains confident that the deal will be approved.