Poundland wants to buy its closest rival in an agreed deal worth Â£47.5m in cash and Â£7.5m in shares.
Initial investigations by the Competition and Markets Authority (CMA) said this could cause issues, including store closures, in 80 areas.
Now Poundland has rejected the CMA's suggestion to re-think the deal.
In its initial findings, the CMA said the deal could worsen the position for shoppers in local areas owing to a cut in quality, fewer promotions and store closures.
It said there was "a realistic prospect of substantial lessening of competition" in these areas where the two companies overlapped.
The authority suggested the concerns could be addressed in a "clear-cut manner" by the companies to prevent a full investigation.
Now Poundland has said there would be no changes to its plan, and has invited the CMA to move to a full review.
The company said it "remained confident that the combination of the two businesses will provide better choice, value and service for 99p Stores' customers".
It also claimed that the deal was "great" for anyone who held a stake in either business.

The annual June event - known as the Hoppings, after an old English word for dance - features more than 300 rides, sideshows, and other amusements.
The Discovery Museum exhibition explores the fair's history and the lives of the travelling showmen.
Visitors will also be able to play on vintage slot machines.
The gathering began as a Temperance Fair in 1882, in what was seen as an antidote to the Newcastle Races which had, up to then, been held on the Town Moor.
Through the years, generations of travelling families from all round the country have taken part in what is believed to be the largest such event in Europe, and it continues to attract tens of thousands of visitors.
The Discovery Museum exhibition - which runs until 1 October - features more than 50 vintage working amusement machines, from What the Butler Saw (early moving pictures) to pinball and fruit machines, which visitors can play using old pennies purchased from the museum.
Carolyn Ball, Museum Manager said: "The Hoppings is firmly placed in Tyneside's events calendar and has been loved by people in the area for generations.
"The exhibition will celebrate the history of the famous fair and visitors can step back in time and have a go on lots of rare vintage amusement machines."

Josie James, from Clwt y Bont near Caernarfon, had been discharged from a mental health unit despite having "murderous thoughts towards herself".
An inquest heard her parents had not been given clear advice or an emergency phone number.
A narrative conclusion was recorded.
Miss James died in August 2015. The inquest heard on the day of her death she had told a friend she was going to jump off the bridge.
The alarm was raised immediately but she had already gone over the side.
Pathologist Dr Mark Lord said she died from a ruptured major artery due to a fall from a height and said she would have died on impact.
Miss James' mother, Joy James said: "As a family we have no interest in pointing the finger at any individual. We just want lessons to be learned."
In a statement, Betsi Cadwaladr University Health Board said: "We acknowledge that there was no effective communication with her family.
"We are working hard to improve the way we work with families, which includes ensuring they are supplied with treatment plans and additional information and advice to support the ongoing care of our service users."
It added families of patients can access its intensive community treatment team, and they are asked how they wish to be communicated with when patients are admitted.
A user group has also been set up, which the health board said helps it "listen and learn about how to make significant, meaningful improvements" in the care it provides.
Recording a narrative conclusion, assistant coroner Nicola Jones explained that she was going to move away from a suicide conclusion because it was not clear what Miss James' state of mind was at the time.
Discount store Poundland has invited the competition authorities to move to a full review of its proposed tie-up with rival 99p Stores.
[NEXT_CONCEPT]
An exhibition celebrating the 135th anniversary of what is billed as the largest travelling funfair in Europe has opened in Newcastle.
[NEXT_CONCEPT]
A health board has acknowledged there was "no effective communication" with the family of a 15-year-old girl who fell to her death from the Menai suspension bridge.