The ruling follows the £100.3 million takeover of Bournemouth Water by South West Water parent company Pennon last month.
The takeover has yet to be approved by the CMA, and the competition authority initially ruled that Pennon had to keep its business functions separate from its new acquisition.
In a derogation granted to Pennon, following a request by the company on 23 April, the CMA has now stated that Pennon can provide a limited number of back office services to Bournemouth Water.
These include banking changes, new debt raising, dealing with tax, debt collection, and pooling surplus cash.
The CMA has added that should the merger be prohibited, any copies of any information passed between Pennon and Bournemouth Water should be destroyed, with the originals being returned.
The merger news marked the first major M&A activity in the water sector following the conclusion of the PR14 process, bar the CMA’s inquiry into Bristol Water’s final determination.
It also follows Ofwat chair Jonson Cox’s comments in Decmebr when he opened the door to “radical” M&A in the water sectos. Cox called for “dynamic and differentiated” approaches to any merger and acquisition activity.
The CMA is expected to make a ruling on whether the Pennon takeover of Bournemouth Water can be completed by October.