Water Act 1989

Provisions with respect to competition

28 Functions of Director with respect to competition

(1) If and to the extent that he is requested by the Director General of Fair Trading to do so, it shall be the duty of the Director to exercise the functions of that Director under Part III of the [1973 c. 41.] Fair Trading Act 1973 so far as relating to courses of conduct which are or may be detrimental to the interests of persons who are consumers in relation to the supply of water by water undertakers or the provision of sewerage services by sewerage undertakers, whether those interests are economic or interests in respect of health, safety or other matters; and references in that Part to that Director shall be construed accordingly.

(2) There are hereby transferred to the Director (so as to be exercisable concurrently with the Director General of Fair Trading)—

(a) the functions of that Director under sections 44 and 45 of the Fair Trading Act 1973; and

(b) the functions of that Director under sections 50, 52, 53, 86 and 88 of that Act,

so far as relating to monopoly situations which exist or may exist in relation to commercial activities connected with the supply of water or the provision of sewerage services; and references in Part IV and sections 86, 88 and 133 of that Act to that Director shall be construed accordingly.

(3) There are hereby transferred to the Director (so as to be exercisable concurrently with the Director General of Fair Trading) the functions of that Director under sections 2 to 10 and 16 of the [1980 c. 21.] Competition Act 1980 so far as relating to courses of conduct which have or are intended to have or are likely to have the effect of restricting, distorting, or preventing competition in connection with the supply of water or securing a supply of water or with the provision or securing of sewerage services; and references in those sections and in section 19 of that Act to that Director shall be construed accordingly.

(4) Before either Director first exercises in relation to any matter functions transferred by any of the following provisions, namely—

(a) paragraph (a) of subsection (2) above;

(b) paragraph (b) of that subsection; and

(c) subsection (3) above,

he shall consult the other Director; and neither Director shall exercise in relation to any matter functions transferred by any of those provisions if functions transferred by that provision have been exercised in relation to that matter by the other Director.

(5) It shall be the duty of the Director, for the purpose of assisting the Monopolies Commission in carrying out an investigation on a reference made to them by the Director by virtue of subsection (2) or (3) above, to give to the Commission—

(a) any information which is in his possession and which relates to matters falling within the scope of the investigation, and which is either requested by the Commission for that purpose or is information which in his opinion it would be appropriate for that purpose to give to the Commission without any such request; and

(b) any other assistance which the Commission may require, and which it is within his power to give, in relation to any such matters;

and the Commission shall, for the purposes of carrying out any such investigation, take into account any information given to them for that purpose under this subsection.

(6) If any question arises as to whether subsection (2) or (3) above applies to any particular case, that question shall be referred to and determined by the Secretary of State; and no objection shall be taken to anything done under—

(a) Part IV or section 86 or 88 of the [1973 c. 41.] Fair Trading Act 1973; or

(b) sections 2 to 10 of the [1980 c. 21.] Competition Act 1980,

by or in relation to the Director on the ground that it should have been done by or in relation to the Director General of Fair Trading.

(7) Expressions used in this section which are also used in the Fair Trading Act 1973 or the Competition Act 1980 have the same meaning as in that Act.

29 Mergers of water or sewerage undertakings

(1) Subject to the following provisions of this section, it shall be the duty of the Secretary of State to make a merger reference to the Monopolies Commission if it appears to him that it is or may be the fact—

(a) that arrangements are in progress which, if carried into effect, will result in a merger of any two or more water enterprises; or

(b) that such a merger has taken place at any time on or after 11th January 1989 otherwise than as a result of the carrying into effect of arrangements that have been the subject of a reference by virtue of paragraph (a) above.

(2) For the purposes of this section an enterprise shall be regarded as a water enterprise—

(a) in relation to a merger on or after the transfer date, if it is carried on by a water undertaker or sewerage undertaker; and

(b) in relation to a merger on or after 11th January 1989 and before the transfer date, if it is or was carried on by a statutory water company within the meaning of the 1973 Act or by a water authority.

(3) The Secretary of State shall not make a merger reference under this section in respect of any actual or prospective merger of two or more water enterprises if it appears to him—

(a) that the take over from which the merger has resulted or, as the case may be, would result was initiated before 9 a.m. on 11th January 1989;

(b) that the value of the assets taken over does not exceed or, as the case may be, would not exceed the amount for the time being specified in section 64(1)(b) of the [1973 c. 41.] Fair Trading Act 1973 (condition of merger reference relating to amount of assets taken over); or

(c) that the only water enterprises already belonging to the person making the take over are enterprises each of which has assets the value of which does not exceed or, as the case may be, would not exceed that amount.

(4) For the purposes of subsection (3) above a merger of two or more enterprises results from a take over initiated before 9 a.m. on 11th January 1989 if—

(a) the Secretary of State or the Director General of Fair Trading was given notice before that time on that date of the material facts about the proposed arrangements or transactions resulting in the merger; or

(b) the merger results exclusively from the acceptance of offers to acquire shares in a body corporate and those offers—

(i) were all made before that time on that date; or

(ii) in so far as they were not so made, consist in offers made, by the same person and in respect of the same shares, in substitution for offers made before that time on that date.

(5) In relation to a merger of two or more water enterprises—

(a) the value of the assets taken over shall, for the purposes of subsection (3) above, be determined in accordance with section 67 of the Fair Trading Act 1973 by reference only to assets employed in or appropriated to a water enterprise; and

(b) the value of the assets of a water enterprise belonging to the person making the take over shall be taken for those purposes to be the value of such assets employed in or appropriated to that enterprise as by virtue of the exceptions in paragraph (a) of subsection (2) of that section are disregarded in determining the value of the assets taken over;

and paragraph (b) of that subsection shall apply for determining the value of the assets referred to in paragraph (b) above as it applies in relation to the assets taken over.

(6) For the purposes of subsections (3) and (5) above and of any determination in accordance with those subsections—

(a) the assets treated as employed in or appropriated to a water enterprise carried on by a company holding an appointment under this Chapter, a statutory water company within the meaning of the 1973 Act or a water authority shall include all the assets for the time being of that company or authority;

(b) every water enterprise any of whose assets fall to be disregarded as mentioned in subsection (5)(b) above shall be treated as belonging to the person making the take over;

(c) the enterprises mentioned in paragraph (b) above shall be treated as separate enterprises in so far as they are carried on by different companies holding appointments under this Chapter or, in relation to any time before the transfer date, by different statutory water companies; and

(d) subsections (3) and (4) of section 67 of the [1973 c. 41.] Fair Trading Act 1973 (assets treated as appropriated to an enterprise and mergers over a period) shall apply as they apply for the purposes of, and of any determination in accordance with, subsection (2) of that section.

(7) The Secretary of State shall not make a reference under this section in relation to the merger of any two or more enterprises, or in relation to any arrangements which will or may result in such a merger, if—

(a) the merger of those enterprises has been; or

(b) arrangements that might result in the merger of those enterprises have been,

the subject of a merger reference made before the passing of this Act under Part V of the Fair Trading Act 1973.

(8) Nothing in this section shall prejudice any power of the Secretary of State, in a case in which he is not required to make a reference under this section, to make a merger reference under Part V of the Fair Trading Act 1973 in respect of any actual or prospective merger of two or more water enterprises.

(9) In this section and section 30 below—

(a) “enterprise” has the meaning given for the purposes of sections 64 to 77 of the Fair Trading Act 1973 by section 63(2) of that Act; and

(b) references, in relation to any two or more enterprises, to the merger of those enterprises are references to those enterprises ceasing, within the meaning of Part V of that Act, to be distinct enterprises;

and sections 66 and 66A of that Act (time at which enterprises cease to be distinct) shall have effect for the purposes of this section and section 30 below as they have effect for the purposes of that Part.

(10) If the Secretary of State considers that it is appropriate for subsection (3) above to have effect with a reference in paragraph (b) to a different amount, or for the condition set out in that paragraph to be modified in any other respect, he may, in relation to mergers after the coming into force of the regulations, by regulations make such modifications of that paragraph and, for that purpose, of the other provisions of this section as may be prescribed.

30 References under section 29

(1) Subject to subsections (2) to (5) below, the [1973 c. 41.] Fair Trading Act 1973 shall have the effect in relation to any reference under section 29 above as if—

(a) any such merger of two or more water enterprises as is required to be the subject of such a reference were a merger situation qualifying for investigation; and

(b) a reference under that section were made under section 64 of that Act or, as the case may be, under section 75 of that Act (references in anticipation of a merger).

(2) Nothing in subsection (1) above shall have the effect in relation to any reference under section 29 above of applying—

(a) so much of Part V of the Fair Trading Act 1973 as requires the Monopolies Commission to consider any of the matters set out in subsection (1) of section 64 of that Act; or

(b) the provisions of sections 69(2) to (4) and 75(3) of that Act (power to restrict matters referred).

(3) In determining on a reference under section 29 above whether any matter operates, or may be expected to operate, against the public interest the Monopolies Commission—

(a) shall have regard to the desirability of giving effect to the principle that the number of water enterprises which are under independent control should not be reduced so as to prejudice the Director’s ability, in carrying out his functions by virtue of this Act, to make comparisons between different such water enterprises; and

(b) shall have regard to the desirability of achieving any other purpose so far only as they are satisfied—

(i) that that other purpose can be achieved in a manner that does not conflict with that principle; or

(ii) that the achievement of that other purpose is of substantially greater significance in relation to the public interest than that principle and cannot be brought about except in a manner that conflicts with that principle.

(4) No order shall be made under Part V of the Fair Trading Act 1973 in consequence of any merger reference made under section 29 above in respect of an actual merger unless the reference was made within the appropriate time limit; and if on such a reference the Monopolies Commission are satisfied that the reference was not made within that time limit their report on the reference shall state that fact and nothing else.

(5) For the purposes of subsection (4) above the appropriate time limit is—

(a) in the case of a reference in respect of a merger which took place before the passing of this Act, the period of six months beginning with the day on which this Act is passed; and

(b) in any other case of a merger which has taken place before the reference, the period of six months beginning with whichever is the later of—

(i) the day on which the merger took place; and

(ii) the day on which the material facts about the transactions which resulted in the merger first came to the notice of the Secretary of State or the Director General of Fair Trading or were made public within the meaning of section 64 of the [1973 c. 41.] Fair Trading Act 1973.

(6) In this section “water enterprise” has the same meaning as in section 29 above; and the reference to the number of water enterprises under independent control is a reference to the number of water enterprises there would be if two or more water enterprises counted as one enterprise wherever they would be treated for the purposes of Part V of the Fair Trading Act 1973 as having ceased to be distinct enterprises.