Barratt-Redrow merger competition concerns limited to Shropshire

Barratt and Redrow together are active in more than 400 local areas but, having concluded a detailed phase one investigation into the deal, the Competition & Markets Authority (CMA) has found only one to be of any concern.

That is in the local area around a Barratt development in Whitchurch in Shropshire, which includes nearby towns such as Nantwich, Ellesmere and Market Drayton.

The CMA found that both house-builders hold a high combined share of land in the catchment area centred 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 said that it was aware there may be further consolidation among house-builders in the UK.

Barratt and Redrow now have the opportunity to submit proposals by 22^nd August to 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.”

Barratt chief executive David Thomas said, "We are pleased that the CMA has found there would be no harm to competition in all but one of the areas in which Barratt and Redrow overlap.

“We remain confident that the combination of Barratt and Redrow will be approved and that it is in the best interests of our customers and wider stakeholders. Together we plan to build on our shared strengths and create an exceptional homebuilder, in terms of quality, service, and sustainability, helping to deliver the homes the country needs.”

Redrow chief executive Matthew Pratt added: “Barratt and Redrow are two leading house-builders, with strong reputations for quality, service and sustainability that have been decades in the making. Once the CMA process has completed, we are looking forward to our future as one team, accelerating the delivery of high-quality homes that the country so urgently needs."

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