The Competition and Markets Authority (CMA) has found that Barratt’s plan to purchase rival Redrow Homes raises local competition concerns around one of its developments in Shropshire.
The competition watchdog is asking both housebuilders to resolve these concerns before the £2.5bn merger can go ahead.
The first phase of the CMA’s investigation into the deal found that both housebuilders currently hold a high combined share of land in the catchment area centred around the Barratt development at Tilstock Road, in Whitchurch, Shropshire, with the addition of Redrow’s development at Kingsbourne in Nantwich.
If the deal goes ahead, the CMA said that it could lead to higher prices and lower-quality homes for homebuyers in this catchment area.
However, the CMA found that once the deal is complete, the merged business will continue to face competition from rivals nationally and in all other overlapping local areas (including from other large and smaller regional housebuilders, with additional constraints coming from homes sold via the second-hand market).
The investigation did not find UK-wide competition concerns in the merger deal.
Barratt is spending £23m on its merger operation with Redrow. Shareholders of both companies approved the move in May.
Opportunity to resolve the concerns
The CMA has now allowed Barratt and Redrow to submit proposals until 15 August 2024 to address these concerns. If none are received, then the CMA’s investigation could progress to a more in-depth Phase 2 review.
CMA’s executive director for mergers, Joel Bamford, 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.
"Our initial investigation found concerns specifically in one area in and around Whitchurch, the companies now have the opportunity to agree workable solutions which address our concerns rather than move to a more in-depth investigation.
