The Office of Fair Trading said the £34 million acquisition by Breedon Aggregates of a package of assets from Aggregate Industries UK raises a realistic prospect of a substantial lessening of competition in the supply of primary aggregates, asphalt and ready-mix concrete in a number of areas in the north of Scotland.
Sheldon Mills, senior director at the OFT, said: "Aggregates, asphalt and ready-mix concrete are essential to a wide variety of local infrastructure projects for public and private construction work.
"Our investigation indicates that Breedon and Aggregate Industries were close competitors and the merger may lead to a strong market position in a number of local areas in the north of Scotland sufficient to lead to increased prices for public sector and business customers.
"We consider it appropriate for the Competition Commission to conduct an in-depth investigation into this completed merger." The OFT said the parties submitted an offer to remedy the competition lost by the merger but it did not address all of the organisation's concerns.
The Competition Commission has until 10 March next year to report.
If the commission finds any elements of the deal are anti-competitive it could require Breedon Aggregates to sell the assets concerned.
Breedon acquired assets including 11 aggregates quarries, four asphalt plants, seven ready-mix concrete plants and two concrete block factories from Aggregate Industries in the Grampian, Tayside and Fife, Highlands and Hebrides regions in April.