The Competition Commission is to investigate the acquisition of Streetcar by US rivals Zipcar after the Office of Fair Trading said it was concerned that the deal may breach competition rules. The deal was sealed earlier this year and saw Zipcar grow its fleet of short-term rental vehicles by 1,400. Initially the US based car club had 370 cars in the UK.

Amelia Fletcher, senior director of mergers at the OFT, said that it had been established that the two companies, as well as being the largest in London, were also the most competitive with each other. The acquisition of Streetcar by Zipcar means that competition will now be gone.

Fletcher added that because the car club phenomenon was so new to the car rental scene, it is important that it is protected in its infancy, especially as the potential for growth is so huge. Because of the deal Zipcar is now far larger than its nearest London competitor, City Car Club.

Chairman and chief executive of Zipcar, Scott Griffith, said he was sorry the Commission felt it had to launch an investigation into the acquisition of Streetcar, but added that he was sure the result would be positive for the company. He went on to say that it was a shame that a delay would now be imposed on a transaction that would benefit consumers as well as the environment.

Zipcar purchased Streetcar for £32 million in April. The Competition Commission is due to announce its findings in the New Year.