Fears have been raised about the future of Southern Water following a government decision over a proposed takeover.

The Department of Trade and Industry backed a Competition Commission report which said the £2 billion acquisition of the Worthing-based company by French utilities giant Vivendi "may be expected to operate against the public interest" by making it harder to compare prices across the market.

The Commission made a majority decision that the deal be given the go-ahead as long as Vivendi sells its minority stake in water and support services firm, South Staffordshire.

However, because there was no unanimous view from the Competition Commission, the DTI said it had, instead, asked Ofwat and the Office for Fair Trading to examine a number of other potential conditions or remedies to offset its concerns.

Vivendi will have to decide whether the proposed remedies are acceptable and whether or not to proceed with the purchase.

Competition Minister Melanie Johnson said:

"This is a very complex case but I want to be absolutely sure the consumer gets a good deal now and in the future."