(3B) Subsections (4) and (5) of section 14, and sections 14A and 14B, below
apply to references to the Competition Commission under this section
as they apply to references under section 14.
(3C) A report of the Competition Commission on a reference under this
(a) shall be made to the Authority; and
(b) shall include definite conclusions on the questions or other
matters comprised in the reference, together with such an
account of their reasons for those conclusions as, in the opinion
of the Competition Commission, is expedient for facilitating a
proper understanding of those questions or other matters and
of their conclusions,
and subsections (5) and (6) of section 15 below apply to such a report as
they apply to a report on a reference under section 14.”
(3) Subsections (3)(b)(i), (4) and (5) shall cease to have effect.
55 Conditions of appointments under the WIA
(1) The WIA is amended as follows.
(2) In section 14(5) (modification references to the Competition Commission)—
(a) after “this section” there is inserted “or in carrying out functions under
section 16A below”,
(b) after “the investigation” there is inserted “or the carrying out of those
(c) after “such investigation” there is inserted “or such functions”.
(3) In section 16 (modification of conditions of appointment following report of
Competition Commission), after subsection (4) there is inserted—
“(4A) After considering any representations or objections made in response
to proposals set out in a notice under subsection (3) above, the
Authority shall give notice to the Competition Commission—
(a) setting out the modifications it proposes to make to remedy or
prevent the adverse effects specified in the report; and
(b) stating the reasons for making the modifications.
(4B) The Authority shall include with the notice under subsection (4A)
above a copy of any representations or objections received in relation to
the notice under subsection (3) above.
(4C) If the period of four weeks from the date on which the notice under
subsection (4A) above is given elapses without a direction under
section 16A(1)(a) below having been given to it, the Authority shall—
(a) make the modifications set out in the notice; or
(b) if a direction under section 16A(1)(b) below has been given,
make the modifications which are not specified in the
(4) After section 16 there is inserted—
“16A Commission’s power of veto following report
(1) The Competition Commission (in this section referred to as “the
Commission”) may, within the period of four weeks after the date on
which it is given a notice under section 16(4A) above, direct the
(a) not to make the modifications set out in that notice; or
(b) not to make such of the modifications as may be specified in the
and the Authority shall comply with any such direction.
(2) The Secretary of State may, within the period of four weeks after the
date on which the Commission is given a notice under section 16(4A)
above and on the application of the Commission, direct that the period
for giving a direction under subsection (1) above (and, accordingly, the
period mentioned in section 16(4C) above) shall be extended by
(3) The power to give a direction under subsection (1) above may only be
exercised in respect of such of the modifications set out in the notice
under section 16(4A)(a) above as appear to the Commission not to be
the modifications which are requisite for the purpose of remedying or
preventing all or any of the adverse effects specified in the report as
effects which could be remedied or prevented by modifications.
(4) If the Commission gives a direction under subsection (1) above, it—
(a) shall give notice setting out the modifications proposed by the
Authority, the terms of the direction and the reasons for giving
(b) shall itself make such modifications as appear to it to be
requisite for the purpose of remedying or preventing—
(i) if the direction was given under subsection (1)(a) above,
the adverse effects specified in the report as effects
which could be remedied or prevented by
(ii) if the direction was given under subsection (1)(b) above,
such of those adverse effects as are not remedied or
prevented by the modifications made by the Authority
under section 16(4C)(b) above.
(5) In exercising its power under subsection (4)(b) above, the Commission
shall have regard to the matters to which the Authority is required to
have regard when determining the conditions of a company’s
(6) Before making modifications under subsection (4)(b) above the
Commission shall give notice—
(a) stating that it proposes to make the modifications and setting
(b) stating the reason why it proposes to make them;
(c) specifying the period (not being less than twenty-eight days
from the date of publication of the notice) within which
representations or objections with respect to the proposed
modifications may be made,
and shall consider any representations or objections which are duly
made and not withdrawn.
(7) A notice under subsection (4)(a) or (6) above shall be given—
(a) by publishing the notice in such manner as the Commission
considers appropriate for the purpose of bringing it to the
attention of persons likely to be affected by the making of the
(b) by serving a copy on the Authority and the company whose
conditions of appointment it is proposed should be modified.
(8) The Commission may not make any modification under this section
which the Authority could not make under section 16 above.
(9) After making modifications under this section the Commission shall
publish a notice stating that the modifications have been made and
setting them out, with the reasons for making them.
(10) This section does not apply to the modification of the conditions of a
company’s appointment following a report of the Commission made
before the commencement of section 55 of the Water Act 2003.
16B Commission’s power of veto following report: supplementary
(1) For the purposes of the law relating to defamation, absolute privilege
attaches to any notice under subsection (4)(a), (6) or (9) of section 16A
(2) In giving any notice under subsection (4)(a) or (6) of section 16A above,
or publishing any notice under subsection (9) of that section, the
Commission must have regard to the following considerations before
disclosing any information.
(3) The first consideration is the need to exclude from disclosure (so far as
practicable) any information whose disclosure the Commission thinks
is contrary to the public interest.
(4) The second consideration is the need to exclude from disclosure (so far
(a) commercial information whose disclosure the Commission
thinks might significantly harm the legitimate business
interests of the undertaking to which it relates; or
(b) information relating to the private affairs of an individual
whose disclosure the Commission thinks might significantly
harm the individual’s interests.
(5) The third consideration is the extent to which the disclosure of the
information mentioned in subsection (4)(a) or (b) above is necessary for
the purposes of the notice.
(6) The following sections of Part 3 of the Enterprise Act 2002 shall apply,
with the modifications mentioned in subsections (7) and (8) below, for
the purposes of any investigation by the Commission for the purposes
of the exercise of its functions under section 16A above, as they apply
for the purposes of any investigations on references under that Part—
(a) section 109 (attendance of witnesses and production of
(b) section 110 (enforcement of powers under section 109: general);
(c) section 111 (penalties);
(d) section 112 (penalties: main procedural requirements);
(e) section 113 (payments and interest by instalments);
(f) section 114 (appeals in relation to penalties);
(g) section 115 (recovery of penalties); and
(h) section 116 (statement of policy).
(7) Section 110 shall, in its application by virtue of subsection (6) above,
have effect as if—
(a) subsection (2) were omitted;
(b) in subsection (4), for the words “the publication of the report of
the Commission on the reference concerned” there were
substituted “the publication by the Commission of a notice
under section 16A(9) of the Water Industry Act 1991 in
connection with the reference concerned or, if no direction has
been given by the Commission under section 16A(1) of that Act
in connection with the reference concerned and within the
period permitted for that purpose, the latest day on which it
was possible to give such a direction within the permitted
(c) in subsection (9) the words from “or section” to “section 65(3))”
(8) Section 111(5)(b) shall, in its application by virtue of subsection (6)
above, have effect as if for sub-paragraph (ii) there were substituted—
“(ii) if earlier, the day on which a notice is published by the
Commission under section 16A(9) of the Water Industry
Act 1991 in connection with the reference concerned or,
if no direction has been given by the Commission under
section 16A(1) of that Act in connection with the
reference concerned and within the period permitted for
that purpose, the latest day on which it was possible to
give such a direction within the permitted period.”
(9) Provisions of Part 3 of the Enterprise Act 2002 which have effect for the
purposes of sections 109 to 116 of that Act (including, in particular,
provisions relating to offences and the making of orders) shall, for the
purposes of the application of those sections by virtue of subsection (6)
above, have effect in relation to those sections as applied by virtue of
(10) Accordingly, corresponding provisions of this Act shall not have effect
in relation to those sections as applied by virtue of that subsection.”
Licensing of water suppliers
56 Licensing of other water suppliers
Schedule 4, which contains amendments to the WIA to provide for the
licensing of suppliers of water other than water undertakers, is to have effect.
The Drinking Water Inspectorate
57 The Chief Inspector of Drinking Water and the Drinking Water Inspectorate
(1) Section 86 of the WIA (which provides for the appointment of technical
assessors for the enforcement of water quality) is amended as provided in
subsections (2) to (8).
(2) I n subsection (1), the words “as technical assessors” are omitted.
(3) After subsection (1) there is inserted—
“(1A) Subject to subsection (1B) below, the Secretary of State shall designate
one such person as the Chief Inspector of Drinking Water.
(1B) If the function of the Secretary of State under subsection (1) above is
transferred to any extent to the Assembly—
(a) subject to paragraph (b) below, the Assembly may designate
one such person appointed by it as the Chief Inspector of
Drinking Water for Wales; but
(b) if the person designated by the Assembly is the same as the
person designated by the Secretary of State as the Chief
Inspector of Drinking Water, he shall be known as such in both
(4) In subsection (2), for “A person” there is substituted “An inspector”.
(5) In subsection (3)(a) and (b), for “a person” there is substituted “an inspector”.
(6) In subsection (4), for “person”, wherever it appears, there is substituted
(7) In subsection (6), for the words from “on summary conviction” to the end there
“(a) on summary conviction, to a fine not exceeding £20,000;
(b) on conviction on indictment, to a fine.”
(8) After subsection (6) there is added—
“(7) Proceedings by the Secretary of State for an offence under this section
or in relation to the quality and sufficiency of water supplied using a
water undertaker’s supply system may be instituted and carried on in
the name of the Chief Inspector of Drinking Water.
(8) In this section “inspector” means the Chief Inspector of Drinking Water
or any other person appointed under subsection (1) above.”
(9) In section 219 of the WIA (general interpretation), after subsection (9) there is
“(10) If the Assembly designates a person as Chief Inspector of Drinking
Water for Wales under section 86(1B) above, references in this Act to
the Chief Inspector of Drinking Water, as respects anything to be done
in relation to him, shall be taken as references to the person designated
as the Chief Inspector of Drinking Water by the Secretary of State and
also the person designated by the Assembly as the Chief Inspector of
Drinking Water for Wales.”
(10) Subsection (7) does not have effect in relation to any offence committed before
the commencement of that subsection.
58 Fluoridation of water supplies
(1) The WIA is amended as follows.
(2) For section 87 (fluoridation of water supplies at request of health authorities)
there is substituted—
“87 Fluoridation of water supplies at request of relevant authorities
(1) If requested in writing to do so by a relevant authority, a water
undertaker shall enter into arrangements with the relevant authority to
increase the fluoride content of the water supplied by that undertaker
to premises within the area specified in the arrangements.
(2) But a water undertaker shall not be required by subsection (1) above to
enter into any such arrangements until an indemnity with respect to the
arrangements has been given by virtue of section 90 below—
(a) to the water undertaker; and
(b) to any licensed water supplier which is entitled to one.
(3) In this section and the following provisions of this Chapter—
(a) references to a relevant authority—
(i) in relation to areas in England, are to a Strategic Health
Authority established under section 8 of the National
Health Service Act 1977;
(ii) in relation to areas in Wales, are to the Assembly; and
(b) references to water supplied by a water undertaker are to water
supplied (whether by a water undertaker or a licensed water
supplier) to premises using the supply system of that
(4) The area specified in arrangements under this section may be—
(a) in relation to England, the whole or any part of the area of the
Strategic Health Authority in question;
(b) in relation to Wales, such area comprising the whole or any part
of Wales as the Assembly may determine.
(5) The arrangements shall be on such terms as may be agreed between the
relevant authority and the water undertaker or, in the absence of
agreement, determined in accordance with section 87B below.
(6) Those terms shall include provision—
(a) requiring the relevant authority to meet the reasonable capital
and operating costs incurred by the water undertaker in giving
effect to the arrangements;
(b) specifying circumstances in which the requirement to increase
the fluoride content may be temporarily suspended; and
(c) for the variation of the arrangements at the request of the
(7) The relevant authority shall consult the Authority in relation to the
terms to be included in any arrangements under this section (in
particular, terms which affect the operation of the water undertaker’s
(8) If two or more relevant authorities request a particular water
undertaker to enter into arrangements in respect of adjoining areas—
(a) the authorities shall co-operate with each other so as to secure
that the arrangements (taken together) are operable and
(b) if suitable terms are not agreed for all the arrangements, a
combined reference may be made by the relevant authorities
under section 87B below to enable the terms of each set of
arrangements to be determined so that they are consistent.
(9) If a relevant authority requests a water undertaker to vary
arrangements, the authority shall co-operate with any relevant
authority for an adjoining area which has entered into arrangements
with the same water undertaker so as to secure that following the
variation the arrangements (taken together) will be operable and
(10) If suitable terms are not agreed for a variation mentioned in subsection
(9), a combined reference may be made by the relevant authorities
under section 87B below to enable the terms of the variation to be
determined so that (following the variation) both sets of arrangements
(11) Before carrying out the consultation required by subsection (1) of
section 89 below in relation to a step mentioned in paragraph (a), (b) or
(c) of subsection (2) of that section, a relevant authority shall consult the
water undertaker in question as to whether the arrangements which
would result from taking that step would be operable and efficient (or,
where it is proposed to terminate the arrangements, as to whether it
would be reasonably practicable to do so).
87A Target concentration of fluoride
(1) Arrangements under section 87(1) above shall include provision for
securing that, so far as reasonably practicable, the concentration of
fluoride in the water supplied to premises in the specified area is
maintained at the general target concentration of one milligram per
(2) But the arrangements may provide for the concentration in the
specified area (or any part of it) to be lower than that if the relevant
authority considers that it is not reasonably practicable to achieve the
general target concentration in the specified area (or that part of it).
(3) Any such lower concentration must still be as high as is reasonably
practicable in the circumstances.
(4) If, in relation to any area (“area A”), an order under section 88A(1)
below specifies a general target concentration lower than that for which
any arrangements effective there provide (or, by the previous operation