Market Analysis

Britain's competition watchdog raised concerns on Friday regarding Pennon Group's acquisition of Sutton and East Surrey (SES) Water, warning that it could impede the water regulator's ability to effectively compare water companies.

The Competition & Markets Authority (CMA) expressed apprehension that the deal might diminish Ofwat's authority by excluding SES from its dataset, thereby reducing the pool of comparators crucial for estimating cost allowances and setting service quality targets.

The CMA, which initiated an inquiry into the matter in January, stated that unless Pennon offers satisfactory undertakings, it will proceed with a comprehensive investigation.

Pennon has until May 13 to submit its proposed undertakings to the CMA.

In January, Pennon acquired the holding company of SES Water for an enterprise value of £380 million (approximately $482 million), thereby extending its services to the region.

Pennon already possesses South West Water, Bristol Water, and Bournemouth Water.

SES Water, as per Pennon's website, exclusively supplies drinking water in the South East, serving approximately 745,000 customers across East Surrey, West Sussex, West Kent, and South London, with a daily provision of 160 million litres of clean water.

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