Pennon Regulatory News (PNN)

PENNON GROUP

11 January 2022

CMA decision - Bristol Water merger

Further to Pennon's announcement on 22 December 2021, the Competition and Markets Authority ("CMA") has announced that it considers there are reasonable grounds that the undertakings offered by Pennon might be accepted by the CMA under the Water Industry Act 1991. Should undertakings be accepted by the CMA, this would enable the merger with Bristol Water to be cleared without reference to a phase 2 merger review.

In line with standard procedure, the CMA has confirmed that it will launch a consultation on the undertakings put forward by Pennon, which is expected to conclude by 7 March 2022. We will continue to work transparently and collaboratively with the CMA during this consultation process.

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.

On 22 December 2021, Pennon announced its intention to offer appropriate undertakings in lieu of a Phase 2 merger review, by 31 December 2021. These undertakings proposed 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 customers in all the regions served by the Pennon Group, whilst also providing Ofwat with comparative cost and performance data.

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.