Competition Concerns over Barratt-Redrow Merger

THE COMPETITION and Markets Authority (CMA) has said the proposed £2.5bn merger of Barratt Homes and Redrow raises competition concerns in one local area centred in Whitchurch, Shropshire.

Having concluded phase one of its investigation, the competition watchdog found that both housebuilders hold a high combined share of land in the area around the Barratt development at Tilstock Road, with the addition of Redrow’s development at Kingsbourne in Nantwich.

If the deal goes ahead, the CMA found 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.

While this deal did not raise UK-wide competition concerns, the CMA says it is aware there may be further consolidation amongst housebuilders in the UK and is committed to carefully assessing mergers in the housebuilding market further, both on a national and local level.

Competition Concerns

Barratt and Redrow now have the opportunity to submit proposals which address the CMA’s concerns in the local area around the Tilstock Road development, to avoid the deal moving to an in-depth phase two review.

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.”

>> Read more about the Barratt-Redrow merger in the news