Knowing your chances - Taking a price determination to the Competition Commission
Final Determinations for PR09 are expected from Ofwat in November 2009. Water companies then have a limited period of time to decide whether to accept the Final Determination or to object, triggering a reference to the Competition Commission (CC) for review.
The Draft Determination, expected in July 2009, is the first point that a realistic assessment of the need for a reference can be made, and the strength of the company's potential case assessed. Considering the case for a reference early would allow companies to develop and 'test' their strategy before the Final Determination and a potential reference.
The decision as to whether to trigger a reference needs to be based on a robust assessment of the likelihood and magnitude of success in the CC process against the downside risks of such a move. In particular, the decision needs to be based on an understanding of how the CC will approach the review and the likely outcomes. Go / no-go analysis takes an independent view of the risks and rewards of triggering a reference to enable a well-informed decision.
