The Competition and Markets Authority (CMA) has launched an investigation into the merger of crowdfunding platforms Seedrs and Crowdcube.
The platforms unveiled plans to merge in October, subject to regulatory approval.
Both platforms have been a popular route for peer-to-peer lenders looking to raise finance.
The CMA was already investigating whether the deal could be cleared under normal merger rules and now, at the request of Seedrs and Crowdcube, has fast-tracked its inquiry to a full investigation.
An announcement from the CMA said the transaction “gives rise to a realistic prospect of a substantial lessening of competition in the supply of equity crowdfunding platforms.”
It could, the CMA warned, mean businesses and investors are left with fewer choices, higher fees and poorer quality services.
The merger will now be referred for an in-depth phase two investigation, which is overseen by an independent group of panel members.
If competition concerns are found, the independent group will set out potential options for addressing these concerns.
“Crowdcube and Seedrs are well-known names in the equity crowdfunding world and are two of the biggest platform providers in this market,” Andrea Gomes da Silva, executive director of markets and mergers at the CMA, said.
“Their services are used by thousands of investors and businesses, particularly early stage start-up businesses that tend to have limited options for raising investment.
“We’ve found a real risk that the merger could lead to less choice.”