The Office of Fair Trading (OFT) is to refer a deal involving interdealer broker ICAP (ICAP.L) to the Competition Commission.

The completed deal involved the sale of ICAP's treasury management consultancy service business Butlers to Sector Treasury Services.

The regulator said the businesses were the top suppliers of treasury management consultancy services on a retainer basis to local authorities.

In a market statement, the OFT said the two businesses were considered competitors whose merger had led to a combined market share of more than 70 per cent.

Sheldon Mills, director of mergers at the OFT, said, 'Our investigation identified concerns about the potential impact of this transaction on local authorities, and we also received a significant number of submissions to this effect.

'We therefore believe this is an appropriate case to refer to the Competition Commission for a fuller investigation.'

Treasury management consultancy services include supply of information and advice on a range of issues.

In the statement the OFT was of the opinion that remaining suppliers were unlikely to be able to constrain the merged entity and that barriers to entry in this market are high.

Local authorities, it stated, could end up paying higher prices or experiencing a reduction in quality, range or service.

The Competition Commission is expected to report by 14 September 2011.