Ofwat's proposal to fine United Utilities over transfer pricing

Ofwat notice (115 pages, PDF) of a proposed fine of £8.5 million on United Utilities alleged past and continuing infringements of Ofwat's transfer pricing rules in its regulatory accounting returns. This relates to services purchased by the regulated water business from United Utilities Networks, United Utilities Facilities Management, United Utilities Property Solutions, THUS and Vertex. Ofwat's main complaint is that United Utilities has not undertaken competitive market testing in cases where it could have done.

Ofwat had already made adjustments to United Utilities' transfer pricing figures in the 1999 and 2004 price control reviews, and there appears to be no allegation that any excessive costs have been recovered by United Utilities from customers as a result of the alleged infringements.

Ofwat's starting point for setting the proposed fine was 0.8 per cent of annual turnover — much lower than the 10 per cent figure which would be used for a very serious infringement.

Representations by Wednesday 16 May 2007.

For further information or advice please contact Franck Latrémolière.

Filed under Ofwat, Water.

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