The Competition and Markets Authority has said there are “reasonable grounds” to accept Pennon’s undertakings which could clear the way to completing its acquisition of Bristol Water – the CMA had previously announced on 22^nd December it had decided to refer Pennon Group’s acquisition of Bristol Water for a phase 2 investigation.

A statement published yesterday by the CMA said:

“ The CMA considers there are reasonable grounds for believing that the undertakings offered by Pennon, or a modified version of them, might be accepted by the CMA under the Water Industry Act 1991.”

The CMA is currently investigating the completed acquisition by Pennon Group plc of Bristol Water Holdings UK Limited under the provisions of the Enterprise Act 2002 and the Water Industry Act 1991.

In reaching its earlier decision published in December, the CMA said it had placed significant weight on Ofwat’s opinion on whether the merger is likely to prejudice its ability, in carrying out its functions, to make comparisons between water enterprises.

Ofwat had submitted that it believed the merger was likely to prejudice its ability to make comparisons between water enterprises, and provided the CMA with detailed reasons to support

The CMA had decided, on the information currently available to it, that “it is or may be the case that the… merger has prejudiced or is likely to prejudice Ofwat’s ability, in carrying out its functions, to make comparisons between water enterprises under the Water Industry Act 1991.”

On the basis of its review of the evidence and the submissions made by Pennon and Ofwat, the CMA had found that the merger is “likely to have an adverse impact on Ofwat’s ability to regulate wholesale base water costs for water companies.”