Competition – press release

CMA publishes water merger issues statement

The CMA has published an issues statement as part of its investigation into the merger of Bournemouth Water with South West Water.

Last month, the Competition and Markets Authority (CMA) announced it was referring the completed acquisition by Pennon Group plc (the owner of South West Water Limited) of Bournemouth Water Investments Limited (which operates Bournemouth Water) for a mandatory in-depth investigation.

The inquiry group of CMA panel members investigating the merger must decide whether a relevant water merger has taken place and, if so, whether the merger has prejudiced, or may be expected to prejudice, the ability of Ofwat to make comparisons between water enterprises.

The inquiry group must report by 22 November 2015.

South West Water Limited and Bournemouth Water both supply water to household and non-household customers.

The issues statement identifies clearly for all interested parties the key questions that the inquiry is examining. The issues statement does not imply that the inquiry group has yet identified any concerns. The full issues statement is available on the case page along with all other published information relating to the investigation.

Anyone wishing to respond to the issues statement should do so in writing, by no later than 5pm on 17 July 2015, to Pennon.BournemouthWater@cma.gsi.gov.uk or write to:

Project Manager
Pennon/Bournemouth Water merger inquiry
Competition and Markets Authority
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 CMA has a duty to make an automatic reference to a phase 2 investigation if it believes that it is or may be the case that a merger of any 2 or more water enterprises has taken place and (i) that the value of the turnover of the target water company exceeds £10 million; and (ii) that the acquiring firm already owns water companies that each has turnover exceeding £10 million.
  2. The Water Act 2014 makes changes to the regime which will remove the CMA’s duty to automatically refer water mergers for phase 2 investigation. Once the new regime commences, water mergers will therefore include a phase 1 merger investigation to assess whether any concerns that the merger could prejudice Ofwat’s ability to carry out its regulatory functions merit a more in-depth investigation. The relevant provisions are not yet in force and so this merger is subject to a mandatory reference.
  3. All the CMA’s functions in phase 2 merger inquiries are performed by inquiry groups chosen from the CMA’s panel members. The appointed inquiry group are the decision makers on phase 2 inquiries.
  4. The CMA’s panel members come from a variety of backgrounds, including economics, law, accountancy and/or business. The membership of an inquiry group usually reflects a mix of expertise and experience (including industry experience).
  5. The full text of this decision will be placed on the case page as soon as is reasonably practicable.
  6. Inquiries should be directed to Siobhan Allen (siobhan.allen@cma.gsi.gov.uk, 020 3738 6460).
  7. For information on the CMA see our homepage, or follow us on Twitter @CMAgovuk, Flickr and LinkedIn. Sign up to our email alerts to receive updates on merger cases.