UK competition watchdog probing National Grid's $11 billion WPD deal

(Reuters) - The UK's competition regulator said on Thursday it was investigating National Grid's proposed $11 billion purchase of England's largest electricity distribution business, Western Power Distribution (WPD).

The Competition and Markets Authority (CMA), in its initial enforcement order, said that it has reasonable grounds for suspecting that if the deal went through, it would result in National Grid and WPD "ceasing to be distinct."

National Grid in March had agreed to buy WPD from U.S.-based PPL Corp as the company positions itself for a climate-driven transition from gas to electric power.

The regulator said National Grid should not integrate WPD with its business without written consent from the regulator while the investigation is being carried out.

"The CMA has issued a hold separate order, meaning that following anticipated completion of the transaction this summer, National Grid will own the WPD asset but not control it until regulatory approval has been received," a National Grid spokesman said in an e-mailed statement.

(Reporting by Shanima A in Bengaluru: Editing by Bernard Orr and Ramakrishnan M.)