The Office of Fair Trading has asked the Competition Commission to investigate whether Zipcar's takeover of Streetcar is likely to mean higher prices or reduced services for users in the UK.
Zipcar bought Streetcar in April, mainly for its strong UK presence.
They're both car rental clubs and are in the process of moving to Zipcar branding. Mobile applications and smartcards make it easy to find a car nearby and rent it for as short a period as an hour.
The regulator accepted that the greater scale of the merged firm provided advantages in terms of numbers of members, parking spaces and cars - all needed for future growth. But it had concerns about the ability of a newcomer to the market to compete, especially in London.
The OFT also recognised there was competition from other types of business like traditional car rental and other services, but not enough to fully allay its concerns.
The full OFT statement is here.
The Competition Commission is expected to report by 24 January 2011.
The merged firm is also planning an initial public offering - that might be delayed for the outcome of the Competition Commission investigation.®