PENNON GROUP

22 December 2021

CMA phase 1 decision - Bristol Water merger

Today, the Competition and Markets Authority ("CMA") published the outcome of its Phase 1 merger review following Pennon's acquisition of Bristol Water. As anticipated, during this phase of the review the CMA considered whether the merger of Bristol Water with South West Water is likely to prejudice Ofwat's ability to make comparisons between water companies. Throughout this process we have worked transparently and collaboratively with both Ofwat and the CMA.  

The CMA has confirmed its intention to pursue a Phase 2 merger review unless undertakings it considers to be acceptable are put forward by Pennon. In line with the CMA's guidance, the CMA will have until 10 January 2022 to reach a decision on whether to provisionally accept the proposed undertakings. Should those undertakings be provisionally accepted, in line with standard procedure, the CMA would then launch a consultation on those proposals.

Pennon intends to offer appropriate undertakings by 31 December 2021. The proposed undertakings would seek to maintain separate price controls for the Bristol Water region within a merged water business[1]. This combined entity would enable the most effective and efficient delivery of services for our customers in all the regions we serve, whilst also providing Ofwat with comparative cost and performance data.

Background

Pennon's acquisition of Bristol Water Holdings UK Limited completed on 2 June 2021 and in line with standard procedure, is subject to CMA review under the Water Industry Act 1991.

The Non-Household element of the acquisition was referred under the provisions of the Enterprise Act 2002 and was unconditionally cleared on 5 November 2021.

About Pennon

Pennon is a UK-focused water infrastructure group, comprising South West Water (incorporating Bournemouth Water), Bristol Water and Pennon Water Services.

South West Water

South West Water provides water and wastewater service to a population of c.1.8 million in Cornwall, Devon and parts of Dorset and Somerset, and water only services to c.0.5 million in parts of Dorset, Hampshire and Wiltshire.

Bristol Water

Bristol Water is a regulated water only company supplying drinking water to a population of approximately 1.2 million people in the Bristol region.