The proposed merger of two north Devon bus companies has been sent for investigation amid concerns about one firm having a monopoly.
Stagecoach wants to buy First Devon's business in the area but the Office of Fair Trading (OFT) has sent the deal to the Competition Commission.
The OFT said the "potential impact of the merger in terms of harm to passengers in north Devon is particularly significant".
A decision is expected in December.
The OFT said it was particularly concerned the proposed merger would reduce competition on a number of routes where the firms competed around Barnstaple.
Amelia Fletcher of the OFT said: "Mergers between rivals in local markets can result in price rises or a reduction in journeys for passengers.
"As such, we believe it is appropriate that the Competition Commission reviews this merger in detail to ensure that the interests of passengers in Devon are protected."
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