The Water Mergers (Modification of Enactments) Regulations 2004

Sections 35 to 36: Questions to be decided in relation to mergers

11.  Part 3 of the 2002 Act has effect as if, for sections 35 and 36, there were substituted—

“Questions to be decided in relation to completed water mergers

35— (1) Subject to section 127(3), the first questions to be decided by the Commission on a merger reference under section 32(b) of the 1991 Act shall be—

(a) whether a water merger has taken place; and

(b) if so, whether that merger has prejudiced, or may be expected to prejudice, the ability of the Authority, in carrying out its functions by virtue of the 1991 Act, to make comparisons between different water enterprises.

(2) Any decision of the Commission on a merger reference under section 32(b) of the 1991 Act that a water merger has taken place shall be treated as a decision that no water merger has taken place if the decision is not that of at least two-thirds of the members of the group constituted in connection with the reference in pursuance of paragraph 15 of Schedule 7 to the 1998 Act.

(3) Any decision of the Commission on a merger reference under section 32(b) of the 1991 Act that a water merger has prejudiced, or may be expected to prejudice, the ability of the Authority, in carrying out its functions by virtue of the 1991 Act, to make comparisons between different water enterprises shall be treated as a decision that the water merger has not prejudiced, or may be expected not to prejudice, that ability of the Authority if the decision is not that of at least two-thirds of the members of the group constituted in connection with the reference in pursuance of paragraph 15 of Schedule 7 to the 1998 Act.

(4) For the purposes of this Part there is a prejudicial outcome if—

(a) a water merger has taken place and that merger has prejudiced, or may be expected to prejudice, the ability of the Authority, in carrying out its functions by virtue of the 1991 Act, to make comparisons between different water enterprises; or

(b) arrangements are in progress which, if carried into effect, will result in a water merger and that merger may be expected to prejudice the ability of the Authority, in carrying out its functions by virtue of the 1991 Act, to make comparisons between different water enterprises.

(5) The Commission shall, if it has decided on a reference under section 32(b) of the 1991 Act that there is a prejudicial outcome (within the meaning given by subsection (4)(a)), decide the following additional questions—

(a) whether action should be taken by it under section 41(2) for the purpose of remedying, mitigating or preventing the prejudice to the Authority or any adverse effect which has resulted from, or may be expected to result from, the prejudice to the Authority;

(b) whether it should recommend the taking of action by others for the purpose of remedying, mitigating or preventing the prejudice to the Authority or any adverse effect which has resulted from, or may be expected to result from, the prejudice to the Authority; and

(c) in either case, if action should be taken, what action should be taken and what is to be remedied, mitigated or prevented.

(6) In deciding the questions mentioned in subsection (5) the Commission shall, in particular, have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the prejudice to the Authority and any adverse effects resulting from it.

(7) In deciding, on a merger reference under section 32(b) of the 1991 Act, whether to take action for the purpose of remedying, mitigating or preventing the prejudice to the Authority or any adverse effect which has resulted from, or may be expected to result from, the prejudice to the Authority and, if so, what action should be taken, the Commission may, in particular, have regard to the effect of any such action on any relevant customer benefits in relation to the merger concerned provided that—

(a) a consideration of those benefits would not prevent a solution to the prejudice concerned; or

(b) the benefits which have accrued, or may be expected to accrue, are substantially more important than the prejudice concerned.

Questions to be decided in relation to anticipated water mergers

36— (1) Subject to section 127(3), the first questions to be decided by the Commission on a merger reference under section 32(a) of the 1991 Act shall be—

(a) whether arrangements are in progress which, if carried into effect, will result in a water merger; and

(b) if so, whether that merger may be expected to prejudice the ability of the Authority, in carrying out its functions by virtue of the 1991 Act, to make comparisons between different water enterprises.

(2) Any decision of the Commission on a merger reference under section 32(a) of the 1991 Act that arrangements are in progress which, if carried into effect, will result in a water merger shall be treated as a decision that no arrangements are in progress which, if carried into effect, will result in a water merger if the decision is not that of at least two-thirds of the members of the group constituted in connection with the reference in pursuance of paragraph 15 of Schedule 7 to the 1998 Act.

(3) Any decision of the Commission on a merger reference under section 32(a) of the 1991 Act that a water merger may be expected to prejudice the ability of the Authority, in carrying out its functions by virtue of the 1991 Act, to make comparisons between different water enterprises shall be treated as a decision that the water merger may be expected not to prejudice that ability of the Authority if the decision is not that of at least two-thirds of the members of the group constituted in connection with the reference in pursuance of paragraph 15 of Schedule 7 to the 1998 Act.

(4) The Commission shall, if it has decided on a reference under section 32(a) of the 1991 Act that there is a prejudicial outcome within the meaning given by section 35(4)(b), decide the following additional questions—

(a) whether action should be taken by it under section 41(2) for the purpose of remedying, mitigating or preventing the prejudice to the Authority or any adverse effect which may be expected to result from the prejudice to the Authority;

(b) whether it should recommend the taking of action by others for the purpose of remedying, mitigating or preventing the prejudice to the Authority or any adverse effect which may be expected to result from the prejudice to the Authority; and

(c) in either case, if action should be taken, what action should be taken and what is to be remedied, mitigated or prevented.

(5) In deciding the questions mentioned in subsection (4) the Commission shall, in particular, have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the prejudice to the Authority and any adverse effects resulting from it.

(6) In deciding, on a merger reference under section 32(a) of the 1991 Act, whether to take action for the purpose of remedying, mitigating or preventing the prejudice to the Authority or any adverse effect which may be expected to result from the prejudice to the Authority and, if so, what action should be taken, the Commission may, in particular, have regard to the effect of any such action on any relevant customer benefits in relation to the merger concerned provided that—

(a) a consideration of those benefits would not prevent a solution to the prejudice concerned; or

(b) the benefits which may be expected to accrue are substantially more important than the prejudice concerned.”.