A preliminary investigation showed Thomas Cook Group PLC’s deal to buy the travel businesses of Cooperative Group and Midlands Cooperative Society “threatens to give rise to competition concerns in the market for holiday distribution, in particular of package holidays, in the UK,” the European Commission, the EU’s antitrust watchdog, said.

Thomas Cook offers holiday tours and other travel services across Europe and is one of two big travel companies in Britain.

The company said it will “continue to work closely with the Office of Fair Trading to obtain a rapid clearance,” referring to the British competition regulator.

Under the proposed deal, Thomas Cook and Cooperative Travel will retain their separate branding across 1,200 stores. The deal does not include Thomas Cook’s online operation.

The companies hope it will result in around £35 million ($54 million) in cost savings thanks to job cuts, store closures, and the combination of their headquarters.