Watchdog launches probe into £2.1bn takeover of Electricity North West

The Competition and Markets Authority (CMA) has initiated an investigation into a £2.1bn deal for the acquisition of Electricity North West by Iberdrola, the owner of ScottishPower.

The probe, announced by the competition watchdog, is centred on a deal first unveiled by Iberdrola in August of the previous year, as reported by City AM.

The CMA stated that it is examining whether the transaction could potentially impact competition within the sector, with a decision on whether to escalate the case for a more detailed investigation expected by 27 March. Stakeholders have until 12 February to submit their observations.

If no competition concerns are raised, the agreement will enable Iberdrola to incorporate a significant portion of North West England’s power grid into its network.

Iberdrola consented to purchase 88 per cent of North West Electricity Networks – trading as Electricity North West (ENW) – which operates the grid from Carlisle down to Manchester and Merseyside.

ENW, which supplies electricity to nearly five million individuals and manages over 37,000 miles (60,000km) of electricity distribution networks, will be operated by ScottishPower following the deal.

The Glasgow-based company will surpass SSE to become the UK's second-largest distribution network operator behind National Grid, serving approximately 12 million people – just under six million homes – across southern Scotland, northern England and parts of Wales.

Distribution network operators (DNOs) are licensed firms that own and operate the infrastructure, including towers, transformers, cables and meters, that carry electricity from the main transmission grid to large geographical areas like Manchester or Merseyside.

Prior to this deal, there were 14 licensed DNOs across Great Britain, owned by six different parent groups.

In addition to running power networks, ScottishPower supplies energy to 4.2 million customers and operates offshore and onshore wind farms across the UK. The ENW deal does not impact its retail supply or generation arms.

Iberdrola and a consortium of investors, led by Japan’s Kansai Electric Power, which will retain 12% of ENW’s capital, have signed a shareholders’ agreement for long-term collaboration.