The tie-up between Costcutter and Palmer & Harvey is being probed by the Office of Fair Trading.

The OFT said it was “considering whether this agreement has resulted in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services”.

Costcutter & P&H announced the deal last month, which will see Costcutter take control of P&H’s symbol fascia names Mace, Your Store and Supershop, transforming it into the UK’s second-biggest symbol fascia.

Reacting to the news, Costcutter CEO Darcy Willson-Rymer said: “We are fully complying with their request for information. The impact on market competition was part of our considerations when completing the deal with Palmer & Harvey and we are therefore confident that the OFT and, should it prove necessary, the Competition Commission will agree with our position.

“Ultimately, this deal is about bringing together two groups of independent retailers to enable us to get lower prices for all of our members.”