In a case which Ofwat says raises “issues of strategic significance” for the water sector, the regulator has published its final decision to accept binding commitments from Bristol Water under the Competition Act 1998 on new water connections..

In March 2013 Ofwat launched a formal investigation in response to two separate complaints into the price and non-price terms Bristol Water applied when providing services to self-lay organisations. The complaints related to the services provided by Bristol Water to enable the provision of new water connections for new development sites, either by itself or by self-lay organisations (SLOs).

The complainants alleged that Bristol Water had used its dominant position to harm competition in the contestable market of providing new water connections, making it difficult for SLOs to operate in Bristol Water’s area.

Last summer Ofwat consulted on its intention to accept binding commitments from Bristol Water. Bristol Water offered to make changes to both its structure and processes in response to the specific competition concerns identified by Ofwat. This includes a clearer separation of Bristol Water’s downstream developer services functions, which operate in a contestable market, from its non-contestable upstream services.

Following consultation, Ofwat has decided that the commitments offered by Bristol Water address the competition concerns identified. The commitments will now be binding and enforceable under the Competition Act. This decision means Ofwat has now closed the investigation with no decision made on whether or not Bristol Water infringed the Competition Act.

Ofwat considers that this case raises issues of strategic significance for the sector, given that the market for new water connections is currently one of only a few areas of competition in the water and sewerage sector. The level playing field and competition law compliance issues the case raises are relevant to the sector as a whole.

Richard Khaldi, Senior Director, Customers and Casework commented:

“Our decision addresses the specific concerns referred to us by two of Bristol’s SLO customers. These commitments will help ensure an effective and fair market, which is good news for customers and the local economy.

“It also raises big issues for the whole sector. All companies need to understand who the customers of each of their services are, and to make sure they are meeting their obligations to ensure a fair, effective market. This can be a particular issue when a company is delivering both contestable and non-contestable services alongside each other. It will also become even more relevant as competition increases as a result of the Water Act 2014.”