The Competition and Markets Authority (CMA) is launching an investigation into the acquisition of Western Power Distribution (WPD) by National Grid.
The CMA has also issued an initial enforcement order, stating that following the completion of the transaction no action can be taken that would lead to the integration of the two, transfer the ownership or control of National Grid, WPD or any of their subsidiaries or otherwise impair the ability of WPD or National Grid to compete independently in any of the markets affected by the transaction unless given prior written permission by the CMA.
A date for the CMA’s phase one decision has yet to be given, nor for the launch of the merger inquiry.
First announced in March, the acquisition – for an equity value of £7.8 billion – came as part of a strategic transformation that will see National Grid focus more on electricity transmission and distribution, with the company also to sell its majority stake in National Grid Gas plc.
The CMA has previously launched investigations into other high profile acquisitions in the energy sector, including a proposed merger between SSE Energy Services and npower that then fell through after Ofgem’s price cap on standard variable tariffs impacted on the financial particulars of the deal, the later acquisition of SSE Energy Services by OVO and the asset swap between E.ON and RWE.
Commenting on the inquiry and enforcement order, a National Grid spokesperson said: “National Grid made a voluntary submission to the CMA when it announced its proposed acquisition of WPD in March.
“As part of the process, the CMA have issued a hold separate order meaning that following anticipated completion of the transaction this summer, National Grid will own the WPD asset but not control it until regulatory approval has been received.”