Infrastructure often foreign owned

Arriva is one of many transport companies now under foreign ownership
12 April 2012

More than a third of the UK's infrastructure - including energy, water and transport - is under foreign ownership, the competition watchdog has said.

But the Office of Fair Trading (OFT) said foreign investment can strengthen competition and help drive down costs.

Foreign ownership varies by sector, the OFT said, with rail being one of the least popular areas. Waste and airport sectors were more highly favoured by overseas companies and investors.

The OFT study aimed to map infrastructure ownership in the UK and provide reassurances to investors over competition. The Government expects some £200 billion will be invested into the country's infrastructure over the next five years, the OFT added.

The OFT conducted the "stock-take" of infrastructure to clarify public understanding of ownership and to analyse the impact ownership has on the consumer.

Heather Clayton, senior director of OFT's infrastructure group, said: "This stock-take pulls together for the first time and in one place information on who owns the UK's economic infrastructure.

"It provides clarity and greater certainty to businesses and investors on when we might consider intervening in infrastructure sectors. Alongside this, our report should have wider benefit to government and other bodies responsible for ensuring competitively provided infrastructure contributes to economic growth."

The study said high-profile corporate acquisitions by foreign investors had drawn widespread attention to the extent of foreign ownership of UK assets.

In the last 10 years, Ferrovial of Spain has bought BAA, the operator of Heathrow and Stansted Airports, Germany's RWE has acquired npower, and Australian bank Macquarie has taken control of car parks by buying NCP. German group Deutsche Bahn recently bought rail and bus operator Arriva, while ports company P&O, which owns UK assets at Tilbury and Southampton, was also bought by Dubai-based DP World in 2006.

The OFT said there were mixed findings on the impact of foreign ownership, with evidence of improved productivity and profitability in certain sectors, contrasted with negative effects for local communities when new owners look to restructure businesses. But the study found that reducing the barriers to foreign ownership widens the potential pool of competitors in the market, which can drive down prices.

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