Ofwat has issued a Supplementary Statement of Objections as part of its continuing investigation into whether Anglian Water behaved in an anti-competitive way in its pricing conduct at the ‘Fairfield’ development in Milton Keynes.

Previously, Ofwat set out in a Statement of Objections that Anglian’s pricing for the Fairfield site may have resulted in a margin squeeze and excluded competition. Ofwat has reviewed its case in light of representations from parties and still has significant concerns in relation to Anglian’s pricing conduct at the site at Fairfield.

The ability to provide water and sewerage services to new developments is open to competition and is a key strategic market for Ofwat as the sector moves toward market opening and greater competition in 2017. Potential new entrants must generally obtain ‘upstream’ off-site supplies from the surrounding appointed monopoly company, which in the case of the Fairfield site was Anglian.

The Supplementary Statement of Objections sets out the view that an equally efficient competitor could not have matched Anglian’s offer to the developer and covered its costs, while paying the input prices set by Anglian.

The regulator said its investigation would continue though no assumption should be made at this stage that there has been an infringement of competition law.

Philip Marsden, an independent director sitting on Ofwat’s Board casework committee, said:

“This is another step in the process of investigation before making a final decision. If there is anti-competitive behaviour in any sector it is customers who lose out. If competition rules have been broken, Ofwat will take action.”

The Statement of Objections or Supplementary Statement of Objections give notice of a proposed infringement decision under the Competition Act 1998 to the party involved. It sets out the facts on which Ofwat relies, the objections raised by Ofwat, the action it proposes to take and the reasons for it.

However, because the document is not a decision document it will not be published. Anglian Water now has the opportunity to make written and oral representations in response to the alleged case set out by Ofwat. The water company’s representations will be considered by Ofwat before any final decision is made.

Commercial negotiations for the Fairfield site took place during 2007-2008, with Anglian and the developer signing an agreement in August 2008. Ofwat commenced the investigation after being contacted by a potential alternative supplier to the site, Independent Water Networks Limited.

A spokesperson from Anglian Water commented:

“We are fully committed to a competitive water industry, where all customers, both domestic and retail, have access to the highest quality of customer care and some of the best quality water and wastewater services anywhere in the world.”