The Competition and Markets Authority (CMA) has launched an investigation into the acquisition of Invicta Water on the grounds that the deal may decrease competition in the water retail market.
In announcing the initial phase of the investigation issued last week the CMA said the completed acquisition may constitute a merger under the Enterprise Act and as such may be expected to result, in a substantial lessening of competition within any market or markets in the UK for goods or services.
In an initial enforcement order issued earlier in the month the CMA said the probe was based on “reasonable grounds for suspecting that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in Castle Water Holdings Limited and Invicta Water Limited (Invicta) ceasing to be distinct.”
The CMA has issued an invitation to comment which closes on 8 August.
Under the enforcement order, the CMA has imposed restrictions on the managements of Castle and Invicta that will stay in place during the period of the investigation. They include an obligation to continue Castle and Invicta as separate businesses with the “Invicta business’s separate sales or brand identity is maintained,” and
“sufficient resources are made available for the development of the Invicta business and the Castle Water Holdings business, on the basis of their respective pre-merger business plans.”
The deadline for the CMA to announce its decision whether to refer the transaction for a Phase 2 investigation is 19 September 2018.