The CMA has found that the £2.5billion purchase of Redrow by Barratt raises competition concerns which must be addressed before the deal can be completed.
Concerns were focused on the local area around Barratt’s Tilstock Road development in Whitchurch, North Shropshire, and includes the neighbouring towns of Market Drayton, Nantwich and Ellesmere.
Phase 1 of the CMA’s investigation into the purchase assessed competition on a national and local level across the country, and resulted in just the one area of concern.
The regulator’s investigation found that Barratt and Redrow hold a large combined share of land in the vicinity of the Barratt development in question, which the CMA says, if the deal goes through, could result in higher prices and lower-quality homes for buyers in the area. However, the investigation went on to report that, once the deal has gone through, the combined business will still face national competition as well as in local areas from both large and SME developers.
The CMA said that while the Barratt Redrow deal did not raise concerns over national competition, it will remain committed to thoroughly assessing future mergers in the housing industry at both a national and regional level.
Joel Bamford, executive director for mergers at the CMA, 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.”
Barratt and Redrow will have the chance to submit proposals to address the concerns raised over the Whitchurch development and local area in the investigation, other the CMA will conduct a more in-depth Phase 2 review of the proposed deal.
