Britain's competition watchdog said on Thursday it would launch an in-depth investigation into the planned $1.2 billion merger between gene sequencing company Illumina Inc and smaller rival Pacific Biosciences of California Inc.

The Competition and Markets Authority (CMA) said it would refer the merger to a second phase investigation after the companies refused to address concerns the watchdog had raised last week.

The CMA's initial or first phase investigation had raised concerns about the deal's impact on the supply of specialist DNA sequencing systems in the UK. (Reporting by Shashwat Awasthi in Bengaluru; Editing by Shailesh Kuber)