Acorn Care Education Group was bought by the National Fostering Agency Group in August last year creating a single organisation worth an estimated £400m.
Following an initial investigation, the Competition and Markets Authority (CMA) has announced it will proceed with a more detailed "phase 2" merger investigation because of concerns that councils in some areas may now struggle to achieve value for money.
The market for independent fostering placement services is worth in excess of £750m a year and the companies are two of the largest national providers to local authorities.
Groups of local authorities often tender for services through framework agreements, which establish a list of independent providers with foster carers available in the local area, to ensure availability when their own in-house network of carers are unable to meet demand.
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