Yorkshire Water's takeover of York Waterworks is to go ahead after clearing its final hurdle this afternoon.

The Government has decided not to refer the £33.8 million bid to the Monopolies and Mergers Commission, despite an 11th hour call for a referral by York MP Hugh Bayley last week.

Waterworks shareholders have already agreed to the takeover, and the two companies will now begin a gradual process of integration.

The deal will mean cuts in water prices for the Waterworks' 175,000 customers across the York area. Yorkshire Water has promised to reduce their bills by 15 per cent by 2004, and this reduction will come on top of any price cuts imposed by Ofwat under the current price review.

The water giant has also promised improvements in other services to customers.

Ofwat gave its backing to the deal some weeks ago, saying that the promised price cut was enough to compensate for the loss of competition between the two companies.

But the campaign group WaterWatch called for the deal to be referred to the Monopolies and Mergers Commission, saying that too many questions remained unanswered about both the environmental implications and the prospects for customers.

York MP Hugh Bayley also called last week for a referral, saying that several concerns he had raised with the company had not been addressed.

He said he had written to chief executive Kevin Bond on February 5 to ask whether his constituents would continue to enjoy their price advantage and the quality of service they currently got from York Waterworks.

He said he had still not received a reply, which he thought bore out his worry that the company was not committed to a high level of customer service in York. Yorkshire Water later apologised for failing to write back to the MP. And a Yorkshire Water spokesman said today that the company was very mindful of the commitments it had made to York customers on prices and levels of service.

It would be working with its new colleagues from York Waterworks to ensure it delivered on those promises.

He added that the company was delighted by the decision not to refer the bid, which was taken by the Department of Trade and Industry on the advice of the Office of Fair Trading.

The announcement that the deal was going ahead was made to the Stock Exchange this morning.

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