Explanatory note

Part 2 of these Regulations amends the Water Mergers (Modification of Enactments) Regulations 2004 (S.I. 2004/3202) (“the WMR 2004”). Part 3 amends the Enterprise Act 2002 (Merger Fees and Determination of Turnover) Order 2003 (S.I. 2003/1370) (“the Merger Fees Order”).

Part 3 of the Enterprise Act 2002 (c.40) contains the main statutory scheme for the regulation of mergers. Sections 32 to 35 of, and Schedule 4ZA to, the Water Industry Act 1991 (c. 56) (“the 1991 Act”) apply that scheme to mergers between water or sewerage undertakers in England and Wales (“water mergers”), subject to modifications set out in the WMR 2004.

Section 14 of the Water Act 2014 (c. 21) amended the 1991 Act to allow the Competition and Markets Authority (“the CMA”) to decide not to refer certain water mergers to the CMA Mergers Panel in certain circumstances and to accept undertakings in lieu of making such a reference.

These Regulations amend the modifications made by the WMR 2004 accordingly, including by imposing time-limits in relation to references and undertakings.

The Merger Fees Order provides for a fee to be payable in respect of merger references made by the CMA under section 32 of the 1991 Act. These Regulations amend the Merger Fees Order so that a fee will also be payable if the CMA, when considering whether to make a merger reference in relation to an actual or prospective water merger, needs to ask the Water Services Regulation Authority for its opinion on the impact of the water merger on its ability to regulate, and how that weighs up against potential customer benefits of the merger. These Regulations also amend the Merger Fees Order so that a fee will be payable if the CMA is considering whether to accept an undertaking under section 33D of the 1991 Act instead of making a merger reference.

A full regulatory impact assessment has not been produced for this instrument as it has no impact on the costs of business. The Explanatory Memorandum is available at www.legislation.gov.uk.