The Commission has been asked 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. The Commission is now asking for written evidence and comment from interested parties.
However, anyone wanting to submit evidence will have to move relatively quickly - deadline for submissions is 25 January 2012.
The OFT has a duty to refer mergers involving water companies to the Competition Commission if it believes that both the target and the acquiring water company have a turnover of more than £10 million each. South Staffordshire Water PLC is owned by South Staffordshire Plc, and Cambridge Water PLC is owned by HSBC Bank plc.
The Commission last looked at a water merger in 2006/07 when it investigated a merger between Mid Kent Water and South East Water.
Under the Water Industry Act 1991 the OFT has a duty to make a refereral 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.
The statutory questions the Commission now has to answer in respect of the merger are:
- whether a water merger has taken place; and
- 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.
The Competition Commission, which is expected to report by 20 June 2012, 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.
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