Competition watchdog flushes away concerns at merger
A PROPOSED joint venture between Severn Trent and United Utilities can move forward after the competition watchdog said it was not going to launch a detailed investigation.
The Competition and Markets Authority (CMA) today said it will not refer the merger to a phase two investigation – a move which would have delayed plans and may have ultimately blocked them.
Coventry-based utility Severn Trent last month announced it had entered into a joint venture agreement with United Utilities to combine their non-household water and wastewater retail businesses.
The operation, to be based in Stoke-on-Trent, would principally comprise billing and customer service activities.
The two companies said they had a strong track records in operating and growing successful non-household retail services in Scotland. With the non-household retail market in England set to open for competition in 2017, they said the joint venture would combine the complementary skills of both companies, including sales, customer service, business strategy and credit management, to provide a better offer for large and small businesses across England and Scotland.
The new operation will be headed by chief executive Sue Amies-King, who is currently Business Retail Director at UU, and the Chief Financial Officer will be Stuart Howell, currently Head of Finance and Business Planning, Business Services at Severn Trent.
Severn Trent will pay £3.5m on completion of the transaction in order to create a 50/50 JV and will share the cost of systems development necessary for the provision of non-household retail services. After completion, Severn Trent and UU will account for the JV, through share of profits of joint ventures, using equity accounting.
