The takeover of Streetcar by Zipcar is facing an inquiry from the Competition Commission. The $50m (£32m) acquisition deal is under scrutiny amid concerns over the potential impact on the rapidly growing car club market in London.

The predominantly US-based Zipcar bought out its smaller UK rival in April. The deal meant that Zipcar added 1,400 new vehicles to the 370 cars it already had in Britain, with the new fleet completely dwarfing that of its nearest competitor, the City Car Club. The two outfits will be at the spearhead of London’s ambitions to become Europe’s most ‘green’ city under Mayor Boris Johnson.

According to the Office of Fair Trading, (OFT) in a statement referring to the Competition Commission inquiry, the short time slot demand for rental vehicles may currently be minimal but there must be protection for its expected growth potential. The group claimed the fact the market was nascent was of particular importance for future development. OFT has voiced concerns that the merger will see the two largest car clubs in London join together as figures indicate that Streetcar and Zipcar were the closest competitors.

Chairman and chief executive of Zipcar, Scott Griffith, is confident that the investigation will ultimately conclude the deal does create less competition in the sector, adding that the delay imposed by OFT was disappointing for the group, customers and the environment. The Competition Commission is not expected to publish its results until early in the new year.