Competition watchdog set to accept Pennon's undertakings in Bristol merger case

The Competition and Markets Authority (CMA) has asked for views by 28 February on its proposal to accept the undertakings offered by Pennon Group in lieu of the reference of its acquisition of Bristol Water for a phase 2 investigation under the Water Industry Act.

Pennon has offered to:

• provide separate reporting information for South West Water and Bristol Water – “comprising primarily of separate historical and forecast cost and cost driver information – which will enable Ofwat to maintain separate wholesale water price controls, with separate revenue controls and revenue limits, for South West Water wholesale water activities and Bristol Water wholesale water activities from 1 April 2025”; and

• agree that Ofwat will maintain separate price controls for the South West Water wholesale water activities and Bristol Water wholesale water activities.

The CMA reported the proposed undertaking, “will allow Pennon to realise the benefits of the merger but continue to provide Ofwat with the information that it needs for the maintenance of separate price controls ... which in turn enables the continuation of the existing comparisons between water enterprises in these areas.”

The CMA said the undertakings were clear cut and readily implementable and reported that Ofwat too believed them to be capable of addressing the prejudice identified by the CMA in its Reference Decision. This found there to be “a realistic prospect that the merger has prejudiced or will prejudice Ofwat’s ability to make comparisons between water enterprises”.

The CMA has until the 7 March (potentially extendable to 5 May if there are special reasons) to decide whether to accept the undertakings, or refer the case for a phase 2 investigation.

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