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Legal challenge scuppers Hyder/United Utilities deal

UNITED UTILITIES last week pulled out of a deal to manage Hyder's Welsh Water operations, following a court ruling that the arrangement flouted European competition rules.

As a result American utility Western Power Distribution, the new owner of Hyder and also owner of UU, has been forced to put its plans to separate Hyder's assets from operations on hold.

The ruling resulted from a complaint from water company Severn Trent that WPD had broken European rules. This followed WPD's announcement that the Welsh Water business would be automatically contracted out to UU for two to three years without a tendering process. It had originally said contracts would be tendered, following a short 'handover period' under UU.

Industry representative body Water UK's director, Graham Setterfield, said the companies would now be aware that automatic handover deals would not be acceptable in future structure changes.

He said: 'A company that is considering a new structure will be looking at the outcome of the UU case and no doubt determine future structure in the light of the case.'

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