The Competition and Markets Authority (CMA) has raised concerns about the proposed merger between housebuilding firms Barratt Developments and Redrow.

Barratt announced an agreement to buy rival Redrow for approximately £2.5bn in February.

The merger has been under investigation by the UK’s competition watchdog since June, however, after the CMA announced it would commence with a phase one investigation into the merger over concerns about the amount of land the pair hold.

This phase of the investigation has now concluded and found that overall, the merger does not raise competition issues except for concerns regarding the supply of new build private residential housing in one local area where the two firms overlap.

The CMA is still expecting the two housebuilders to address these concerns, which centre on an 11-mile area in Shropshire that contains four Barratt developments and a Redrow development that has fewer than 10 plots remaining to sell.

“This merger will be referred for an in-depth, phase two investigation unless the parties offer an acceptable undertaking to address these competition concerns,” a CMA statement said.

Barratt and Redrow have both indicated they intend to engage with the CMA with the objective of agreeing suitable undertakings for the area in Shropshire.

Group chief executive of Barratt, David Thomas, said: “We are 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.

“We remain confident that the combination of Barratt and Redrow will be approved and that it is in the best interests of our customers and wider stakeholders. Together we plan to build on our shared strengths and create an exceptional homebuilder, in terms of quality, service, and sustainability, helping to deliver the homes the country needs.”

Group chief executive of Redrow, Matthew Pratt, added: “Barratt and Redrow are two leading housebuilders, with strong reputations for quality, service and sustainability that have been decades in the making.

“Once the CMA process has completed, we are looking forward to our future as one team, accelerating the delivery of high-quality homes that the country so urgently needs.”

---