Competition Commission Probing Water Merger
The OFT has referred the completed acquisition of Cambridge Water plc by South Staffordshire plc to the Competition Commission for further investigation.
The OFT has a duty to refer mergers involving water companies to the Competition Commission if it believes that both the target and the acquiring water company have a turnover of more than £10 million each.
In the OFT’s opinion, the turnover thresholds are met in this merger, which brings together two water companies – South Staffordshire Water plc, already owned by South Staffordshire plc, and Cambridge Water plc, owned by HSBC Bank plc.
HSBC Bank plc acquired Cambridge Water plc on 5 August 2011, from CKI UK Water Limited, a wholly-owned subsidiary of Cheung Kong Infrastructure Holdings Limited.
The Competition Commission is expected to report by 20 June 2012.
The Competition Commission may extend the 24-week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.
In 2009, DEFRA conducted a public consultation on the Cave Review of competition and innovation in water markets, including the proposal that the turnover threshold for water mergers be increased to £70 million to exclude more mergers from automatic referral to the Competition Commission.
The Government’s White Paper Water for Life, published in December 2011, stated that it was strongly minded to use a future Water Bill to reform the special mergers regime and move to this higher threshold, but that it would consult further on the issue.