The Competition and Markets Authority (CMA) has found that Barratt’s £2.5 billion deal to purchase rival Redrow Homes raises competition concerns in the local area around a Barratt development in Whitchurch, which includes nearby towns such as Nantwich, Ellesmere and Market Drayton.



Having concluded a detailed Phase 1 investigation into the deal – which included assessing competition on the national level and in local areas across Great Britain – the CMA found competition concerns in this one local area.



The CMA found that both housebuilders currently 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 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.



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 2 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.




More information can be found on the Barratt / Redrow case page.

Notes to editors:


  The CMA based its analysis on the relevant catchment area of an 11-mile straight-line distance around the Barratt development at Tilstock Road.
  Barratt and Redrow have until 15 August 2024 to offer proposals which address the CMA’s concerns. If none are received, then the CMA’s investigation could progress to a more in-depth Phase 2 review.
  Alongside gathering information directly from Barratt and Redrow for its Phase 1 decision, the CMA was able to use its findings and evidence gathered during its recent housebuilding market study to inform its investigation.
  The Phase 1 decision is separate to the CMA’s ongoing Competition Act 1998 (CA98) investigation into 8 housebuilders – including Barratt and Redrow – over suspected sharing of competitively sensitive information. More information on this ongoing investigation can be found on the case page.
  For media enquiries, contact the CMA press office on 020 3738 6460 or press@cma.gov.uk.

CMA Raises Local Competition Concerns in Barratt's Acquisition of Redrow Homes

The CMA discovered that Barratt's acquisition of Redrow Homes for £2.5 billion could harm competition in the local area near a Barratt development in Whitchurch, impacting towns like Nantwich and Ellesmere. The concern stemmed from the high combined share of land held by both companies in the catchment area, which may result in increased prices and lower quality homes for buyers.

Although the deal did not raise nationwide competition worries, the CMA remains vigilant about potential consolidation in the UK housebuilding sector. Barratt and Redrow now have the chance to address the CMA's concerns in the local area to prevent the deal from undergoing a Phase 2 review.

The companies must propose solutions to mitigate competition issues around the Tilstock Road development by August 15, 2024. Failure to do so could escalate the CMA's investigation. The CMA utilized insights from its recent housebuilding market study in addition to direct information from Barratt and Redrow for its decision.



CMA Raises Local Competition Concerns in Barratt's Acquisition of Redrow Homes

The Competition and Markets Authority (CMA) identified competition issues in a local area surrounding Barratt's purchase of Redrow Homes, potentially affecting homebuyers in the vicinity.