REG - Competition and Mkts - Merger Update: Barratt / Redrow

RedrowAnnouncement

08/08/2024 08:15

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RNS Number : 7002Z  Competition and Markets Authority  08 August 2024

Barratt given opportunity to resolve local competition concern so deal can
proceed

The CMA's Phase 1 review identified a competition concern in the area around
Whitchurch, Shropshire.

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
(https://www.gov.uk/cma-cases/barratt-slash-redrow-merger-inquiry) case page.

Notes to editors:

1.   The CMA based its analysis on the relevant catchment area of an 11-mile
straight-line distance around the Barratt development at Tilstock Road.

2.   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.

3.   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
(https://www.gov.uk/cma-cases/housebuilding-market-study#final-report) to
inform its investigation.

4.   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
(https://www.gov.uk/cma-cases/investigation-into-suspected-anti-competitive-conduct-by-housebuilders)
.

5.   For media enquiries, contact the CMA press office on 020 3738 6460 or
press@cma.gov.uk (mailto:press@cma.gov.uk) .

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