DGWSDirector-General of Water Services (United Kingdom)
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The Southern Water report is the only example of a complete disagreement between the MMC and the DGWS.
Second, Mid Kent was also on or near the efficiency frontier and its loss would materially affect the quality of information available to the DGWS.
With the exception of the successful Southern Water bid, the DGWS and the MMC appear to agree in their interpretation of section 34(3)(a) of the Water Industry Act 1991 about the way in which the mergers were expected to affect comparative competition.
Further analysis of the "Remedies proposed" column of table 3, however, shows that the DGWS and MMC did, in fact, disagree on a number of important issues.
The DGWS recommended that price reductions of 15%-20% over 5 years would be acceptable as "substantial.
In both cases, the DGWS maintained that price cuts of 15%-20% would be regarded as "substantial" and would therefore compensate for loss of a WASC comparator.
Second, there was a disagreement between DGWS and MMC about the appropriate number of WASC comparators required for the comparative competition exercise.
The principal regulatory requirements are that the DGWS has a duty to make comparisons between companies and that any merger must not prejudice this ability.
The first relates to the quality and quantity of information provided to the DGWS.
The increasing effectiveness of the system is also illustrated by the claims of the DGWS that the ability to value the loss of a comparator has improved over time.
There has been general agreement between the DGWS and the MMC that substantial price cuts and efficiency improvements have been necessary to compensate for the loss of a comparator when the target was a WOC.
27) In contrast the DGWS was initially willing to allow one of the mergers if substantial price cuts were introduced.