Schlumberger (SLB) and ChampionX's (CHX) $7.8 billion planned merger could "substantially" reduce competition in the UK energy market, the country's Competition and Markets Authority said Thursday in an update about the phase one investigation into the potential deal.

"The CMA has decided, on the evidence currently available to it, that it is or may be the case that this merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom," the CMA said.

Schlumberger and ChampionX said in April 2024 that Schlumberger will acquire ChampionX in an all-stock transaction.

The regulator, which launched its inquiry on Jan. 29, said Thursday it will refer the merger for an in-depth phase 2 investigation unless the parties propose undertakings to potentially mitigate the competition issues raised in its phase 1 decision by April 3.

Schlumberger and ChampionX did not immediately respond to requests for comment from MT Newswires.