Water merger issues statement

6 Feb 2012

The CC has been asked by the Office of Fair Trading (OFT) to decide whether the merger may be expected to prejudice the ability of the Water Services Regulation Authority (Ofwat) to make comparisons between water enterprises when carrying out its statutory functions.

The OFT has a duty to refer mergers involving water companies to the CC if it believes that both the target and the acquiring water company have a turnover of more than £10 million each. The CC last looked at a water merger in 2006/07 when it investigated a merger between Mid Kent Water and South East Water (PDF, 100 Kb) .

The issues statement, which is available at the inquiry home page, follows the initial process of gathering information, views and evidence and identifies clearly for all interested parties the specific questions and areas the inquiry is examining. This will form the basis for hearings with the merging parties and other interested parties.

The issues statement should not be seen as implying that the Inquiry Group has identified any particular concerns—the CC has yet to reach any conclusions on this inquiry.

If the Inquiry Group considers that the merger has resulted, or may be expected to result, in a prejudicial outcome, it will consider whether and, if so, what remedies might be appropriate. In doing so, it will take into account any customer benefits that might arise from the acquisition, and will issue any remedies statement, should this be required, at about the time it publishes its provisional findings.

The CC is expected to publish its final report by 20 June 2012 although it will first publish its provisional findings. See inquiry timetable (PDF, 28 Kb) .

The CC would like to hear views on the issues statement from all interested parties, in writing, by 20 February 2012. To submit evidence, please email:

Stafford.Camb@cc.gsi.gov.uk

or write to:

Inquiry Manager (South Staffs/Cambridge Water inquiry)
Competition Commission
Victoria House
Southampton Row
LONDON
WC1B 4AD

Notes for editors

1. The Reference Test—under the Water Industry Act 1991 (as amended by the Enterprise Act 2002) the OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that a merger of any two or more water enterprises has taken place or arrangements are in progress which would result in such a merger. The duty does not apply if the value of the turnover of the water enterprise being taken over or the value of the turnover of each of the water enterprises belonging to the person making the takeover does not or would not exceed £10 million.

2. The statutory questions the CC has to answer in respect of the merger are:

(a) whether a water merger has taken place; and

(b) if so, whether that merger has prejudiced, or may be expected to prejudice, the ability of Ofwat in carrying out its functions by virtue of the Water Industry Act 1991, to make comparisons between different water enterprises.

3. The CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

4. Enquiries should be directed to Rory Taylor or Siobhan Allen on 020 7271 0242