Proposed reforms to the merger regime in water are unjustified and could impair Ofwat’s ability to protect customers, the regulator told the government last week.
It said the government had not clearly explained why the threshold triggering an automatic Competition Commission referral should be raised from a company turnover of £10 million to £70 million.
Ofwat said it was “not confident this change is justified at this time” and could find limited evidence to support it. “What evidence we can find leads us to suggest that the change could be detrimental to our ability to protect customers.”
It suggested instead a two-stage test regardless of threshold, to reduce the “chilling effect” on the market of automatic referral. Ofwat also called for more flexible licensing to allow for mergers in the parts of the value chain due to be opened to competition, including non-domestic retail.
This article first appeared in Utility Week’s print edition of 21st September 2012.
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