Image copyright PA Image caption Poundland and 99p Stores have a combined network of 800 stores

Discount store Poundland's proposed purchase of rival 99p Stores for £55m faces an in-depth investigation by competition authorities.

The tie-up could worsen the position for shoppers in local areas owing to a cut in quality, fewer promotions and store closures, an initial probe found.

Poundland wants to buy its closest rival in an agreed deal worth £47.5m in cash and £7.5m in shares.

The Competition and Markets Authority (CMA) said this could hit 80 areas.

These were where the companies, which have a combined network of 800 stores, currently overlap. There was a further 12 areas where they would be competitors in the near future.

Following an initial investigation, the CMA said there was "a realistic prospect of substantial lessening of competition" in these areas.

The authority said it would now move to a more in-depth investigation unless these concerns were addressed in a "clear-cut manner" by the companies.