The Competition and Markets Authority (CMA) has warned that a takeover in the car auction market could cause competition concerns, and an in-depth investigation will be needed unless the concerns can be addressed.

BCA Marketplace has acquired SMA Vehicle Remarketing and a preliminary investigation by the CMA found that BCA faces strong competition from another national car auctioneer and a range of other local used car auctioneers in most UK regions.

However, customers and competitors raised concerns with the CMA during the investigation that the merger might lead to increased prices or reduction in services in the north-east of England and Scotland.

In Scotland the CMA found that, following the merger, the merged parties will face competition from four other competitors and that as a result, no concerns arose in this area.

But in the Newcastle area, the CMA found that BCA and SMA were close competitors, and that following the merger the merged entity will face competition from only one other physical auction site.

The CMA has therefore found that the merger may lead to higher prices or a reduction in choice or quality of service for customers of used vehicle auction services at physical auction sites in the Newcastle area.

This merger will be referred for a phase 2 investigation unless BCA offers acceptable undertakings to address the competition concerns in the North East.

Sheldon Mills, senior director of mergers and decision-maker in this case, said: “Used vehicle auction services are vital for businesses involved in the buying and selling of used vehicles. We found a significant competitive overlap between the merging parties in the north-east of England which could drive higher auction prices or reduced services or quality.

“BCA has the opportunity to avoid a full phase 2 investigation by offering a solution that clearly addresses these concerns and safeguards the interests of customers.”