(Reuters) - UK's competition watchdog said on Tuesday it might accept Pennon Group's solutions to address its concerns over the water utility's purchase of Sutton and East Surrey (SES) Water, paving way for it to potentially clear the deal.
Pennon, which owns South West Water, Bristol Water and Bournemouth Water in the south and west of England, has offered to provide separate reporting information for SES from the rest of its water businesses upon completion of the deal.
WHY IT'S IMPORTANT?
UK's Competition and Markets Authority (CMA) last week said the deal could hamper water regulator Ofwat by removing SES Water from its dataset and reducing the number of comparators available to estimate cost allowances and set service quality targets.
Pennon, which bought the holding company of SES Water in January for an enterprise value of 380 million pounds ($476.86 million), had said it would offer undertakings to address the CMA's concerns.
CONTEXT
Britain's water companies are under pressure to ramp up investments after a public backlash over poor environmental standards at a time when the companies have continued to pay executive bonuses and dividends to shareholders.
Ofwat, the water regulator for Britain and Wales, has been imposing hefty fines on firms for sub-par environmental standards including sewage leaks into rivers.
KEY QUOTES
"CMA considers that there are reasonable grounds for believing that the undertakings offered by Pennon, or a modified version of them, might be accepted by the CMA to remedy the prejudice identified by the CMA," the regulator said in a statement on Tuesday.
WHAT NEXT?
CMA has until July 16 to decide whether to approve the deal or refer it to a deeper probe. The deadline can be extended to Sept. 11 if the CMA deems it right.
($1 = 0.7969 pounds)
(Reporting by Prerna Bedi in Bengaluru; Editing by Rashmi Aich)
