Regulator clears utilities merger

The Competition and Markets Authority (CMA) has decided not to continue its investigation into the merger between South Staffordshire Water and South West Water’s owner Pennon Group.

The deal, once completed, will create the fourth largest non-household water retail business, with a customer base of 180,000 accounts accounting for an 8% share of the non-household market.

The new group, which will operate as Pennon Water Services (PWS), has been created to take advantage of the opening up of the non-household water retail market in April.

The CMA had launched an initial investigation last month following the European Commission’s decision to refer the case to the United Kingdom.

After a two-week window for comments closed, and based “on the information currently available”, the CMA has decided not to move its investigation to the next phase.

The decision clears the way for the deal to proceed. Pennon Group, which owns South West Water and Viridor, will take an 80% equity stake in the enlarged business, with South Staffordshire taking the remaining 20%.

South Staffordshire’s existing in-area trading names of South Staffordshire Water Business and Cambridge Water Business will be retained, with Source for Business being the out-of-area national brand name.