The remarks came in a response published by the CMA yesterday (27 June) submitted to it by an unnamed company referred to as ‘Company Y’.
They could be significant because, if true, they could cast some uncertainty over the CMA’s ruling that Veolia’s takeover of Suez would leave just two large providers of operation and maintenance (O&M) MRF services to local authorities.
When ruling last month that the deal would lower competition for the supply of O&M services for MRFs, the CMA said Veolia and Suez together account for 40-50% of O&M MRFs, with a similar amount held by Biffa.
Combined, it means Biffa and the parties would have up to 90% of the market, with “no other provider having more than 5%”.
However, Company Y, which said it operates a string of MRFs for local authorities and industrial and commercial waste streams, said its market share has been “overstated” in the ruling.
The company said it operates industrial and commercial transfer stations which focus on industrial and commercial waste streams, and other plants which don’t handle mixed recyclables.
In its response, Company Y said the CMA had used its commercial facilities when calculating market share and therefore it had been significantly overstated.
And, the company said the provisional finding discounted the ability for merchant MRF operators to enter into an O&M contract, even if it hasn’t done before, and highlighted the below companies as examples, who were not mentioned by the CMA.
- N+P (recently acquired Crayford MRF)
- Reconomy (recently acquired Casepak)
- Pearce Recycling
- Urbaser (recently acquired J&B Recycling)
The comments on the MRF and O&M market were shared between the company and the CMA on 1 June, and a subsequent Q&A session, with the key points summarised in the document.
If the comments as Company Y were to be from Biffa, the only other company named as the other major competitor named in the O&M MRF market, observers have indicated that it will be interesting to see whether the CMA reacts to the comments when it delivers its final ruling.
The response document also details Company Y’s other comments on the merger.
Company Y said the role and competitiveness of brokers “appears understated in the provisional findings report”.
The company said brokers themselves have “demonstrated their ability to compete for and win national customers, indeed two thirds of customers surveyed by the CMA indicated they would consider using a broker”.
The inclusion of only Reconomy and Mitie in the competitive assessment, “ignores the significant role other brokers play in the market, including Novati”.
Company Y’s response also said the Provisional Findings Report doesn’t provide a total market size figure for customers with spend of over £250,000.
“However, having regard to the market shares calculated by the CMA, it appears the total market size estimated for customers spending over £250,000 is significantly understated, particularly when compared to Defra’s figure for total I&C tonnage in the UK”.