Water merger curbs may be eased

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The Independent Online

The government may relax the curbs on mergers between water companies to create a "national champion", the Water minister. Elliot Morley, has hinted.

Mr Morley said he was concerned that overseas utilities could buy water companies here but that other UK water companies could not. One option could be for the Government to introduce an amendment to the Water Bill currently going through Parliament to ease the restrictions on water mergers.

Under present law, any merger between two water companies involving assets of more than £30m is subject to an automatic referral to the Competition Commission.

The water regulator, Philip Fletcher, is opposed to an easing of the rules on the grounds that it would make his job of comparing performance between water companies more difficult. Mr Morley told the magazine Utility Week: "I understand his [Mr Fletcher's] arguments about comparators and respect his view but I do fret about the fact that non-UK water companies can buy our water companies but UK companies can't. Of course, we could relax the merger rules, get a few huge companies and they could still be taken over. I'm alert to the arguments on both sides but there's no easy answer to it. I meet Philip Fletcher regularly and we talk about it."

Any change in the rules would have to be sanctioned by the Department of Trade and Industry, which is responsible for merger policy, rather than Mr Morley's Department for Environment, Food and Rural Affairs.