The Competition and Markets Authority (CMA) has approved the acquisition of Bristol Water by Pennon Group after accepting undertakings offered by Pennon.
In December the CMA raised concerns that the deal, which had been announced in June 20221, could impede competitiveness in the market and requested further assurances from Pennon.
The CMA had suggested the merger could undermine Ofwat’s ability to make comparisons between water suppliers and affect its capacity to regulate the sector. It requested further information and said it would otherwise need to undertake further reviews of the deal to ensure it would not impact competition in the market.
In lieu of a phase two merger review, Pennon, which comprises the South West and Bournemouth water companies, agreed to provide separate reporting information to Ofwat for the businesses.
The CMA said this would mean Ofwat can maintain separate wholesale water price controls, revenue controls and limits.
The acquisition has now been cleared for Pennon to hold 100% of the share capital of the holding company for Bristol Water and its subsidiaries.
Pennon completed the acquisition after selling its waste management business Viridor in 2020 for £4.2 billion.
It paid £425 million for Bristol and was able to pay a special dividend of £1.5 billion to shareholders and buy back £400 million of shares.
In June last year, Pennon Group said it remained open to further acquisition opportunities in the UK water sector.