Britain’s competition watchdog has opened an investigation into Barratt Developments’ £2.5billion takeover of FTSE 250 housebuilding rival Redrow.
The Competition and Markets Authority said on Friday it was investigating whether the takeover could result in a ‘substantial lessening of competition’ within UK goods and services markets.
Barratt claimed the deal would help tackle the UK’s huge housing shortfall, but critics at the time raised concerns that it could lead to higher prices as a result of weaker competition.
Higher prices on the cards? CMA will probe Barratt and Redrow’s housebuilding deal
The CMA’s latest intervention follows just weeks after the watchdog warned that Britain’s biggest housebuilders, including Barratt and Redrow, could be colluding on building developments to keep prices high.
The CMA has opened an initial comment period for interested parties, closing 2 April, after which it will launch a formal investigation.
There are already concerns that the concentration of the biggest players in the housebuilding market mean that it is not functioning well. Critics say the deal could make things worse.
It follows a tougher trading period for the housebuilding industry, which has seen demand hit by weaker mortgage affordability and availability, as well increased costs.
Barratt saw its adjusted pre-tax profit fall nearly 70 per cent to £157.1million in the six months to 31 December, with revenues down 33.5 per cent.
Redrow’s profits more than halved to £84million, forcing the group to slash its dividend to 5p a share, as revenue fell by £275million to £756million.
Barratt shares were down 0.7 per cent to 473.8p in early trading on Friday, while Redrow shares were down 0.3 per cent to 661p.
The pair say the deal could help Britain’s housing shortfall – but critics say it will make a concentrated market even worse
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