Competition watchdog expresses concern over Rentokil and Mitie merger

The UK's Competition and Markets Authority (CMA) has warned Rentokil Initial it may have to investigate the company after its completed takeover of Mitie's pest control arm has severely reduced competition in the sector.

The competition watchdog has given Rentokil a deadline of April 23 to outline how it will address concerns that prices could increase and quality reduce now there is less competition, or face in-depth investigation. 

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“Having considered a wide range of evidence, it (CMA) has found there could be a substantial reduction in competition, which may lead to higher prices or reduced quality for customers,” it said in a statement.

A spokesperson for Rentokil, which makes most of its income outside of the UK, unlike Mitie, said: “While we are pleased that the UK Competition and Markets Authority has found no substantial lessening of competition in the local and regional customer sectors, we will now review the decision in detail and consider our next steps.

“This is a small acquisition in line with our strategy to acquire high-quality pest control businesses in growth and emerging markets."

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Rentokil acquired Mitie's pest control arm for £40m last year. 

The CMA rarely requires mergers be rescinded but there is a precedent for it, after JLA's purchase of Washstation in 2017 was dissolved.