UPDATE 2-UK watchdog raises new competition concerns over LKQ Corp/Uni-Select deal

(Adds comments from watchdog in paragraph 3, comments from Uni-Select in paragraph 6)

July 21 (Reuters) - Britain's competition regulator may launch a deeper investigation into auto parts provider LKQ Corp's C$2.8 billion ($2.13 billion) deal to buy Canada's Uni-Select Inc unless the companies offer undertakings to address its concerns.

The Competition and Markets Authority (CMA) has concluded that the LKQ and Uni-Select merger could raise competition concerns in the supply of car parts and garage equipment to independent garages and workshops in 145 local areas in Britain, the regulator said in a statement on Friday.

"Drivers have already been paying 6 pence per litre more for their fuel than they would usually expect to. We are concerned that this transaction could further increase costs to people and businesses," said CMA Senior Director of Mergers, Sorcha O’Carroll.

The deal, which was announced in February, is expected to help LKQ tap into the Canadian company's strong presence in the aftermarket auto parts business.

The UK watchdog launched its initial investigation into the transaction in June.

LKQ and Uni-Select will work on formally submitting remedy proposals to CMA, and are currently reviewing the decision, Uni-Select said. Uni-Select also said it expected deal to be completed during the third quarter of 2023.

The companies have until July 28 to respond to the regulator, the CMA said.

($1 = 1.3164 Canadian dollars) (Reporting by Radhika Anilkumar and Sinchita Mitra in Bengaluru; Editing by Nivedita Bhattacharjee and Jane Merriman)