The water industry in England and Wales is currently facing what is perhaps its most challenging transitionary period since privatisation, according to a new study by international marketing consulting company, Frost & Sullivan.

The study – a strategic analysis of the US$10.1B UK water industry – suggests that the industry’s third review period (2000 to 2005) is likely to herald a major change in the structure of the marketplace, following the implementation of the Competition Act and the average price cuts of 12.3 per cent in March and April 2000 respectively.

The Competition Act awarded stronger legal powers to the industry regulator, the Office of Water Services (Ofwat) and Office of Fair Trading (OFT) to remove barriers from competition. For most of the water companies, this will require a major upheavel of corporate strategies if suppliers are to witness business success while also meeting Ofwat’s efficiency targets.