Severn Trent Water faces a huge fine of up to £965m after frustrating an Evesham company's attempt to gain access to the industry.

Aqua Resources, based at Waterside, has laid down a complaint of 'a wrongful and superfluous requirement' imposed on them by the larger firm.

"Severn Trent insisted that before being allowed to sell our water through its distribution network, in what is known as common carriage, we should be a licensed water undertaker under the Water Act," said Aqua Resource's chief executive, Ray Edmed.

"This flouted the guidance of the director general of Ofwat and we are saying that Severn Trent's behaviour is an abuse of a dominant position, against the Competition Act 1998."

Aqua Resources took its case to the director general of Ofwat, but he refused to investigate the matter.

The firm has since gone to the Office of the Parliamentary Ombudsman, which has given it some backing.

A preliminary hearing ruled that Aqua Resources were suffering from an "unremedied injustice" because of the director general's decision not to investigate the complaint.

As a result of that decision, Severn Trent removed its demand, but the director general has still refused to investigate the matter or provide a full explanation for his decision.

"The simple fact was that Ofwat had advised water companies to do one thing, and Severn Trent was doing another," said the Parliamentary Ombudsman.

Aqua Resources is still pursuing the case and a full hearing will be held on Wednesday, July 20.

"If the claimed wrongdoing by Severn Trent went unchallenged, I fear there would be further barriers at each step of our progress towards introducing competition into the pricing of water, Mr Edmed said.

"If the tribunal finds in our favour, it will give us the right in a separate action to bring a claim for damages."

A Severn Trent Water spokesperson said: "The issue is between Ofwat and Aqua Resources and therefore we will await the outcome."