Draft price remedies for Mid Kent / South East Water merger

Competition Commission proposal (2 pages, PDF) to accept undertakings (9 pages, PDF) from Mid Kent Water and South East Water to give effect to the recommendations of the Commission's May 2007 report.

The proposed undertakings include:

16. SEW and MKW undertake that the Merged Business will use all reasonable endeavours to achieve at least £3.1 million per annum of savings in operating expenditure as soon as is practicable following the creation of the Merged Business.

17. To the extent that PR09 incorporates an adjustment to opex which is consistent with and reflects the approach set out in {a paper attached to} Annex B {2 pages, PDF} (and only to that extent), SEW and MKW undertake that they and the Merged Business will accept, and will not challenge, the outcome of PR09.

The effect of the annex is, to the extent that the expected merger savings have not been fully achieved in 2008/2009, to give the merged company the immediate benefit of the future expected savings for the purposes of Ofwat's comparative efficiency analysis and to remove the same amount from the company's baseline expenditure.

Short consultation period: Responses by noon on Wednesday 21 November 2007.

For further information or advice please contact Franck Latrémolière.

Filed under Competition Commission, Ofwat, Price controls, Water.

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