Merger Update: Pennon / SES

Consultation on undertakings in lieu:

The Competition and Markets Authority (CMA) has opened a consultation on undertakings in lieu of reference offered by Pennon Group Plc (Pennon) to address the adverse impact on Ofwat's system of comparative regulation identified by the CMA over Pennon's completed acquisition of Sumisho Osaka Gas Water UK (including its subsidiary Sutton and East Surrey Water (SES)) (the Merger).

On 3 May 2024, the CMA announced that it would refer the Merger for an in-depth, Phase 2 investigation unless Pennon offered acceptable undertakings in lieu to address the CMA's concerns.

To address the CMA's concerns, Pennon has offered to provide separate reporting information for SES from the rest of Pennon's water businesses post-Merger. The proposed undertakings would enable Ofwat to maintain a separate wholesale water price control for SES, and the flexibility to maintain different or consistent performance targets and incentives.

On 14 May 2024, the CMA announced that it would look in detail at these offered undertakings in lieu. The CMA has until 16 July 2024 to consider whether to accept the undertakings in lieu, or a modified version of them. As part of this process, the CMA is now consulting publicly on whether the proposal is sufficient to address the concerns identified by the CMA.

Before reaching a final decision, the CMA is therefore inviting interested parties to make their views known. The deadline for responses is 5 June 2024.

The consultation on the offered undertakings in lieu and all other information relating to this merger investigation can be found on the dedicated case page on the CMA's website at Pennon / Sumisho Osaka Gas Water UK merger inquiry - GOV.UK (www.gov.uk).

In the event of media enquiries please email press@cma.gov.uk.

TITLE OF MERGER: Pennon / Sumisho Osaka Gas Water UK merger inquiry

Case Ref: ME/7083/23