The Competition Commission (CC) has today (23 April) provisionally cleared South Staffs Water's completed acquisition of Cambridge Water.
The CC was asked in January 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 for the purposes of assessing performance and setting price controls.
CC Deputy Chairman and Chairman of the South Staffs/Cambridge Water Inquiry Group, Simon Polito, said:
“On balance, we do not believe the merger will significantly hinder Ofwat’s task of assessing water companies’ performance and setting price controls.
“The use of comparisons between companies has been central to the regulation of the industry, and is likely to play a significant role for the foreseeable future, although we recognize that there are likely to be changes arising from both the Government Water White Paper and Ofwat’s proposed changes to regulating the sector.
“We have looked at how having one fewer company could affect the precision of Ofwat’s quantitative assessments and to what extent the companies’ performance in areas such as efficiency and service quality could be used as benchmarks to challenge and improve the performance of other water companies. Whereas Cambridge Water’s approach to customer service has provided a benchmark for some other water companies, there are areas where the merged company would be able to set higher standards than before.
“In coming to a provisional clearance decision, we were conscious that there will still be 18 independently-managed water companies to compare, including companies which could provide a small company’s perspective to regulatory debates and customer service.”
The CC is expected to publish its final decision by 20 June 2012.