The Competition and Markets Authority is investigating the anticipated acquisition of Redrow by its rival Barratt to create a £7bn housebuilding giant.
The deal is expected to complete later this year, with Barratt to take over the entire share capital of Redrow for £2.52bn, at a premium of approximately 27.2%.
The CMA is investigating whether the takeover would result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002.
It said: “If so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”
The watchdog issued this preliminary “invitation to comment” to allow interested parties to submit to the CMA any initial views on the impact that the transaction could have on competition in the UK.
This invitation to comment is the first part of the CMA’s information-gathering process, in advance of a formal investigation.
The CMA added that it may “proactively contact companies and organisations that are active in the markets affected by the merger or have valuable insights or evidence that could assist the CMA’s investigation”.
The investigation has been launched during another investigation by the CMA into eight major housebuilders, including Barratt and Redrow, as well as Bellway, Berkeley, Bloor Homes, Persimmon, Taylor Wimpey and Vistry regarding the companies allegedly “sharing commercially sensitive information” with their rivals.
The wider investigation on possible information sharing was launched earlier this year, and the CMA said it “could be influencing the build-out of sites and the prices of new homes”, as well as weakening competition in the market.
The watchdog had at the time said it “has not reached any conclusions at this stage as to whether or not competition law has been infringed”.
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