On 2 August 2011, HSBC Bank plc (HSBC) acquired Cambridge Water plc (Cambridge) from CKI UK Water Ltd. Cambridge is an appointed water undertaker that supplies water to south Cambridgeshire and the city of Cambridge. On the basis that HSBC did not have material interests in any other water/water and sewerage company in England and Wales, the procedure for a mandatory water merger reference to the CC (under section 32 of the Water Industry Act 1991) does not apply in this case. Ofwat has, however, opened a consultation on whether any regulatory issues arise from the acquisition and on whether any modifications should be made to Cambridge's licence as a result.
More specifically, Ofwat are consulting on: the capacity of HSBC to be the owner of a regulated water company; whether HSBC is the appropriate entity to provide the Condition P undertaking (Cambridge’s conditions of appointment require it to obtain legally enforceable undertakings from its "Ultimate Controller" which are aimed at protecting customers by strengthening the ability of the regulated water company to comply with the conditions of its appointment and maintaining the independence of the regulated water company from the rest of the wider corporate group to which it belongs); and whether any modifications are required to Cambridge’s current financial and managerial ring-fencing arrangements.
Responses to the consultation must be received by Ofwat on or before 16 September 2011.