No. CA98/02/17
3 August 2004
The Director General of Water Services (the Director) received a complaint under the Competition Act 1998 (CA98) from Mid Kent Water plc (Mid Kent Water) against Southern Water Services Limited (Southern Water). Both companies are statutory water undertakers under the Water Industry Act 1991. The complaint related to the terms offered by Southern Water to a developer, Rosefarm Estates plc (Rosefarm) for the provision of water, wastewater and infrastructure services to a development site, the EuroKent Business Park (EuroKent), in Southern Water's supply area.
Mid Kent Water was competing with Southern Water for the provision of water, wastewater and infrastructure services to developers in Southern Water's supply area.
Mid Kent Water alleged that Southern Water had breached the prohibition imposed by section 18 of the CA98 (the Chapter II prohibition) by making an offer to Rosefarm to provide sufficient capacity to satisfy the entire water demand of EuroKent without making any charge for off-site works. It drew a contrast with Southern Water's position in earlier correspondence with Rosefarm, in which Southern Water had stated that the cost of works to supply the site could be between £100,000 and £500,000, depending on the amount of water required. In particular, Mid Kent Water alleged that Southern Water's offer was 'effectively predatory pricing' and appeared to be 'discriminatory'.
After carrying out an extensive investigation, the Director has decided that Southern Water's conduct is not caught by the Chapter II prohibition, and therefore there are no grounds for action on his part. In particular, he sees no sufficient reason to doubt that Southern Water's suggestion in correspondence with Rosefarm that a dedicated main from its Fleete Reservoir to EuroKent would be necessary was based on a misunderstanding of what EuroKent's requirements were likely to be. The Director has also observed that there appears to be no legal basis on which Southern Water could have then sought, or could now seek, a contribution from Rosefarm towards its off-site work.
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