The purchase of UK-based Holchem Group by US cleaning chemicals company Ecolab has raised competition concerns in the UK.

The Competition and Markets Authority (CMA) has been investigating the deal since it was announced in December 2018. The companies are two of the largest manufacturers and suppliers of cleaning chemicals to businesses that produce food, drink and dairy products in the UK.

Following a phase 1 investigation, the regulator said it had identified concerns that the acquisition could adversely affect these businesses as a result of higher prices or lower quality services as competition from other suppliers would be severely limited after the merger.

The CMA has given Ecolab until Apr. 17 to address its concerns. Otherwise, it will refer the merger for an in-depth phase 2 investigation, which will be carried out by a group of independent CMA panel members.

Based in Bury, Lancashire, Holchem had sales of about £43 million in 2017. Holchem’s managing director Simon Bell said both companies had a similar product profile and Holchem would benefit from Ecolab’s deep pockets and R&D expertise.

Ecolab announced earlier this year that it intends to spin off its upstream energy businesses into a standalone public company. The two business units are oilfield chemicals and the Wellchem drilling and well completion chemical division.