The takeover of Stagecoach - which has a big depot in Gloucester - by National Express, is be investigated by the Competition and Markets Authority.

The merger is set to create a company worth more than £1.7 billion and achieve £35 million in savings, with National Express gaining access to Stagecoach's well-located depot network.

National Express runs national coach services while Stagecoach specialises in local bus services, but currently also runs the Megabus service. Both companies have been badly impacted by Covid.

The CMA said there were reasonable grounds for suspecting that the deal would result in the two firms 'ceasing to be distinct'.

The authority has issued an interim enforcement order (IEO), which prevents the companies from fully combining while it considers whether the deal would be harmful to competition.

In response, Stagecoach said the IEO would delay the sale of the marketing, retail and customer service activities of its inter-city coach services to ComfortDelGro Corporation Ltd announced in December and expected to have been completed at the end of February.

In a statement Stagecoach said: "The boards of National Express and Stagecoach continue to believe the Stagecoach coach disposal represents a comprehensive solution to any competition concerns that might arise from their overlapping coach operations and will engage with the CMA to allow the Stagecoach coach disposal to complete as soon as possible."

It added: "We do not expect the IEO to materially affect the day to day operations of either National Express or Stagecoach, and the parties will continue to work with the CMA in relation to its review of the combination. At this stage, the boards of National Express and Stagecoach continue to expect the combination to complete around the end of 2022."