Less than two weeks after the Competition and Markets Authority said Pennon’s purchase of Sumisho Osaka Gas Water UK and its subsidiary Sutton and East Surrey Water could harm Ofwat’s ability to make comparisons between water companies, the CMA has announced that it might clear the deal.

The competition watchdog announced on 3rd May that its fast-track Phase 1 investigation had found that Pennon’s purchase of SES could impact Ofwat’s ability to make comparisons between water companies by removing SES from Ofwat’s dataset and reducing the number of comparators available for it to estimate cost allowances and set service quality targets. 

The merging businesses had conceded that the deal could have a detrimental impact on Ofwat’s ability to make comparisons in order to carry out its statutory functions. The Authority said that Pennon intended to offer appropriate undertakings to the CMA by 13 May 2024 and that in line with the CMA's guidance, the CMA will then consider whether to provisionally accept the proposed undertakings.

A brief statement issued by the CMA yesterday entitled CMA to consider undertakings offered said:

"The CMA considers that there are reasonable grounds for believing that the undertakings offered by the Parties, or a modified version of them, might be accepted by the CMA under the Water Industry Act 1991."

In line with standard procedure, if the undertakings are provisionally accepted, the CMA would then launch a consultation on the proposals.