The UK’s competition watchdog is reviewing Aviva’s proposed acquisition of Direct Line, which could delay a £3.7 billion merger. 

The Competition Markets Authority (CMA) stated that it was looking at whether a merger would lead to a “substantial lessening” of competition in the insurance market, despite the two insurance companies reaching a significant agreement in December of last year. 

The CMA has taken notice of the combined businesses, which would constitute a powerful influence in the auto insurance industry. In July, the watchdog will release the results of the investigation.

If the agreement between Aviva and Direct Line is approved, it will increase its market domination over competitors like Prudential and Legal & General.

About 87.5% of the new business would be owned by Aviva shareholders, and 12.5% would be owned by Direct Line shareholders.

The merged business would give the insurer over 20% of the UK’s home and auto insurance market.

Along with its namesake brand, Direct Line owns the Churchill and Green Flag brands. Its portfolio includes insurance coverage for homes, cars, pets, and other things.

JP Morgan experts stated in December that they did not anticipate regulators to raise any concerns about competition.

Although the BBC has contacted Aviva for comment, the CMA stated that the establishment of a single firm “may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”

Any interested parties have been asked to submit feedback to the CMA by May 29th, meaning that people or businesses who may be impacted by the deal’s outcome can voice their opinions.