Detail
The Water Act 2014 changed how mergers in the water industry are assessed. It gives Ofwat a formal role in the phase I assessment which examines whether a merger is like to have a prejudicial effect on our ability to make comparisons in carrying out our functions. More comprehensive and lengthy phase II assessments are now only undertaken if a concern is identified (that isn’t outweighed by relevant customer benefits), and there is the opportunity for ‘undertakings in lieu’ of this more detailed assessment to be accepted to address concerns identified. We asked Europe Economics to undertake a review of recent mergers. The review took account of our October 2015 publication, ‘Ofwat’s approach to mergers and statement of methods’, and the two subsequent mergers between wholesale water companies. We are sharing it to provide companies with the opportunity to take it into account in any future merger. Parties to future mergers may wish to include alternative scenarios reflecting Europe Economics’ suggested analysis. We would welcome comments on Europe Economics’ suggestions, or on how mergers are assessed in general at any time. You can send comments to [email protected]. We are also happy to engage with companies during any pre-notification discussions to develop analysis.