Competition watchdog launches investigation into £2.5 billion merger between Flintshire based Redrow and Barratt

The UK’s competition watchdog has launched a preliminary investigation into the proposed £2.5 billion merger between two of the nation’s leading housebuilders, Barratt Developments and Flintshire-based Redrow.

The Competition and Markets Authority (CMA) review marks a critical first step in assessing whether the deal might significantly lessen competition within the UK’s housing sector.

Announced last month, the merger aims to unite the strengths of Barratt and Ewloe-headquartered Redrow, creating a formidable entity in the industry.

The merged business would deliver over £7.45bn and around 22,600 homes a year, based on past performance.

The companies have projected that their consolidation could lead to approximately £90 million in pre-tax cost savings by the end of the third year following the deal’s completion.

However, the proposed merger has raised concerns about the potential for a “substantial lessening of competition,” as stipulated under the merger provisions of the Enterprise Act 2002.

The CMA’s “invitation to comment” is an open call for feedback from any interested parties, including consumers, industry players, and market analysts, regarding the merger’s possible effects on competition.

This stage is crucial for gathering insights and evidence that will inform the authority’s formal investigation process, which is yet to commence.

Part of the CMA’s concerns revolves around whether the Barratt-Redrow merger could restrict choices or elevate prices for homebuyers across the UK, given the significant market share the combined entity would command.

The CMA said: “The CMA is issuing 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 the CMA’s formal investigation starting.

“The CMA 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.”

Interested parties are encouraged to submit their comments and evidence to the CMA by the specified deadline, contributing to a thorough assessment of the merger’s potential impact on competition within the UK’s housing market.