CMA orders National Grid to hold off from taking control of WPD

The Competition and Markets Authority (CMA) has ordered National Grid to hold off from taking control of Western Power Distribution, while it considers whether to launch an in-depth investigation into its planned acquisition of the company.

National Grid agreed in March to buy the electricity distribution network for £7.8 billion, whilst selling the Rhode Island-based Narragansett Electric Company to WPD’s US owner PPL Corporation for $3.8 billion (£2.7 billion). The firm said it would also sell a majority in its gas transmission business as part of a “strategic pivot” towards the power sector.

The CMA said it wishes to ensure no action is taken that will prejudice its decision on whether to launch a phase 2 investigation into the merger.

As such, the CMA said National Grid should not take ownership or control of WPD, integrate the distribution network operator into the group or do anything that might impair their ability to continue operating independently of each other.

It said both companies must maintain separate operations and brand identities, and that neither should dispose of any assets, make changes to key staff or organisational structures, or share commercially sensitive information between them, outside the ordinary course of business.

The CMA said the pre-emptive order does not prohibit the completion of the transaction, provided that the companies abide by the restrictions.

National Grid said in March that the acquisition of WPD was not conditional on approval from the CMA. The company expects to complete the transaction in July and receive regulatory clearance in September.

Speaking to Utility Week recently, chief financial officer Andy Agg said National Grid would take a “light touch” approach the integration of WPD, keeping it as a distinct unit within the wider group, but said there are opportunities for cost efficiencies “further down the track.”