Concerns over a completed acquisition of a Lancashire vehicle salvage and recycling firm have been raised by the Competition and Markets Authority (CMA).
Following an in-depth investigation, the CMA has provisionally found the deal which saw Copart buy Hills Motors could result in a "substantial lessening of competition" in the market for the supply of salvage services in the UK.
The acquisition, which was completed for an undisclosed sum, was first announced in July 2022.
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Hills Motors is headquartered in Skelmersdale and employs around 200 members of staff.
It had been founded by Jeff and Dorothy Hill more than 40 years ago.
The CMA had previously raised concerns over the deal in November last year.
The watchdog said that over the last five months, an independent CMA panel has examined a "wide range of evidence to better understand the markets and potential impact of the deal".
This included holding site visits and hearings with Copart and Hills Motors, "extensive engagement" with customers and competitors, analysis of tender and other opportunities data.
Following the further investigation, the CMA has now provisionally found that allowing Copart to purchase Hills Motors "could substantially lessen competition in the market for the supply of salvage services in the UK".
However the watchdog has provisionally dismissed concerns that the merger would "substantially lessen competition" in the supply of damaged and other used vehicles or the supply of recycled parts in the UK.
Kirstin Baker, chair of the independent panel of experts conducting this Phase 2 investigation, said: "Vehicle insurance is a significant cost for many individuals and businesses and there is increasing demand for insurers to minimise their environmental impact, while keeping prices low.
"There are very few salvage companies who have a track record of servicing large national contracts for insurance companies, so we are concerned this deal could reduce the options for customers and this could lead to higher prices or lower quality services.
"We invite views on both our provisional findings and the possible remedies we have identified to address our concerns."
The CMA has published a notice of possible remedies with a deadline for comments by May 19.
It has also asked any interested parties to make submissions on its provisional findings by May 26.
The statutory deadline for the CMA’s final report is July 20.
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