The regulator has served an initial enforcement order to avert the integration of the two companies
The UK’s competition regulator has announced a probe into the proposed $11bn acquisition of electricity distribution company Western Power Distribution (WPD) by National Grid.
The Competition and Markets Authority (CMA) has served an initial enforcement order to avert the integration of the two companies.
In its enforcement order, the watchdog stated that it has reasonable grounds to suspect that National Grid and WPD would cease to be distinct if the deal is completed.
In March, National Grid signed an agreement to acquire WPD from US-based electric services company PPL. The acquisition includes PPL WPD Investments (WPD HoldCo), which is the holding company of WPD.
As part of the transaction, National Grid had also agreed to assume WPD’s debt of around £6.6bn ($9.3bn) as well.
Without a prior consent from the CMA, the order prohibits actions that lead to the integration of the WPD HoldCo with the National Grid business.
The order also prevents transfer the ownership or control of the National Grid business or the WPD HoldCo business or any of their subsidiaries.
The CMA has also stated that the WPD HoldCo business should be carried out separately from the National Grid business as the investigation is being conducted. The order also stipulates that the separate maintenance of sales and brand identity of WPD HoldCo business.
The regulator has also asked the companies to operate and update their customer and supplier lists separately.
The CMA order stated that “the WPD HoldCo business and the National Grid business are maintained as a going concern and sufficient resources are made available for the development of the WPD HoldCo business and the National Grid business, on the basis of their respective pre-merger business plans.”