Competition watchdog invites Pennon to submit remedies for Bristol merger or go to Phase two inquiry

The Competition and Markets Authority said on 22 December that it would refer Pennon’s purchase of Bristol Water for a Phase 2 merger inquiry under the Water Industry Act 1991, unless the parties provided information to address its concerns by 31 December. This would involve offering remedies to offset the CMA’s concerns, which centre on the merger undermining Ofwat’s ability to effectively regulate, which could ultimately lead to higher prices and lower quality services for customers.

The CMA found the merger would likely have an adverse impact on Ofwat’s ability to regulate wholesale base water costs. Further, that it could potentially prejudice Ofwat’s ability to set companies’ cost allowances and use comparative regulation.

At the time of writing, the CMA had not issued an update on any remedies proposed by the parties, or its decision on whether or not to proceed with the Phase 2 inquiry.

On 5 November, the CMA cleared the merger under the provisions of the Enterprise Act 2002.