The merger was announced in April this year and was said to promise tremendous benefits to members through access to more cars, more convenience and enhanced technology.

However the OFT announced that it was referring the acquisition to the Competition Commission for additional scrutiny.

Amelia Fletcher, OFT senior director of mergers, said: 'The car club model is a relatively recent phenomenon, but one that is expected to continue growing. The fact that the market is nascent means that it is particularly important to protect the competition that exists at this point.

'This merger will bring together the two largest and most closely competing car clubs in London, and our investigation has indicated that, notwithstanding its much smaller size, Zipcar was a particularly strong and dynamic competitor to Streetcar. Given that we have not been able to rule out competition concerns, we are referring the merger for a fuller investigation by the Competition Commission.'

In a statement, Zipcar said: 'Naturally, we are disappointed by the decision of the OFT, which imposes a delay on a transaction from which members stand to benefit enormously. Combining Zipcar and Streetcar would offer consumers access to more cars, more convenience and enhanced technology—all while reducing car ownership and congestion. Such a combination would present a real alternative to automobile manufacturers, car-sharing providers and car rental companies who have already entered or expressed interest in entering car sharing.'

The Competition Commission is expected to report by 24 January 2011

Zipcar added: 'We intend to fully cooperate with and make our case to the Competition Commission. As we do so, we will keep you informed of our progress.'