Conditional green light for Veolia-Cleanaway acquisition

21 September 2006

The European Commission has given the green light for the merging of two giants of the waste management industry, Veolia Environmental Services and Cleanaway, writes James Cartledge.

The clearance was conditional on Veolia selling off its high temperature incinerator facility at Fawley, with competition authorities deciding the newly-merged company should not have possession of both of the UK's hazardous waste incinerators.


Veolia has agreed to sell the Fawley high temperature incinerator, the Commission said
And, following the EU decision, the Office of Fair Trading in the UK said the matter had also been resolved regarding its concerns.

Veolia is to acquire Cleanaway UK from its parent company Brambles for £595 million. The combined business is expected to have an annual turnover above £1.1 billion.

The Commission said provided the Fawley incinerator was divested by Veolia, the acquisition would "not significantly impede effective competition in the European Economic Area or any substantial part of it". The Fawley plant is about half the size of Cleanaway's Ellesmere Port incinerator and is expected to attract interest, although there are a number of options for hazardous waste in the marketplace.

Commenting on the EU clearance announced today, Veolia said the acquisition would be completed on September 28.

In a statement, the company said: "Completion of the purchase via its waste management division, Veolia Environmental Services, agreed on 30th June 2006, is now expected to take place on 28 September 2006. The acquisition reinforces Veolia Environmental Services' position as a leading player in the UK waste management sector with the combined business having pro-forma 2006 revenues above £1.1billion (€1.6 billion)."

A spokesman told letsrecycle.com the company was making no further comment before next week's completion, but the Commission has revealed that Veolia has agreed to sell the Fawley plant.

In the UK there are currently only two high temperature incineration facilities for large-scale hazardous waste treatment and both belong either to Veolia or to Cleanaway.
- European Commission
Staff
Experts have said "a lot of senior staff" will be transferring from Cleanaway to Veolia through the acquisition.

Veolia Environmental Services, formerly known as the Onyx Group, provides collection and disposal services for municipal, industrial and commercial waste in the UK. The company is owned by French utilities firm Veolia Environnement.

Cleanaway also provides collection, disposal and treatment services for municipal, industrial and commercial waste.

Incinerators
The Commission said outside the area of high temperature incineration, the acquisition did not cause competition concerns "because the new entity would face competition from several strong waste management providers".

However, investigators suggested there would be "significantly" reduced competition concerning the high temperature treatment of hazardous industrial and commercial waste.

The OFT believes that the competition concerns raised by the merger in the UK have been resolved
- Office of Fair Trading
In a statement issued this afternoon, the Commission said: "In the UK there are currently only two high temperature incineration facilities for large-scale hazardous waste treatment and both belong either to Veolia or to Cleanaway. Therefore, the proposed transaction as originally notified would have to have led to a 100% market share on the merchant market for incineration of industrial and commercial hazardous waste in HTIs in the UK."

The Commission added that Veolia "has committed to divest its HTI facility in Hampshire. This would allow at least one second service provider and thus restore the competitive structure existing before the proposed transaction and preclude the creation of a monopoly in this market."

A statement from the Office of Fair Trading confirmed it has withdrawn a referral request made on the acquisition.

The OFT said: "Following the European Commission’s clearance decision under Article 6(2) of Council Regulation (EC) 139/2004 (the EC Merger Regulation or ECMR) today, the OFT withdraws the Article 9 referral request made in relation to the above case on 25 August 2006. The OFT believes that the competition concerns raised by the merger in the UK have been resolved."

Complementary
The coming-together of the two companies will also see the bringing together of a range of facilities and services which are complementary in a number of areas. Veolia with Cleanway will have a range of materials recycling facilities including the Rainham plant which has glass sorting technology.

Cleanaway also has a strong recycling infrastructure on the commercial side and is popular in the marketplace with its Eurobins which will be added to Veolia's broad position in the commercial and industrial sector.

wastepack