The CMA said it was informed on 14 December that Veolia would not offer concessions in order to address competition concerns, and the investigation will now move to the more in-depth phase 2 proceedings.
When undertaking a phase 2 investigation, the CMA conducts more detailed analysis to determine whether a merger has resulted or may be expected to result in a significant lessening of competition, and how to remedy the situation.
The CMA says it made its decision with regard to Veolia and Suez on the basis that “it is or may be the case that this merger has resulted or may be expected to result in a substantial lessening of competition”.
This comes after the European Commission approved the proposed deal last week on the condition of “full compliance with a commitments package offered by Veolia” (see letsrecycle.com story).
Within the European Union area this would mean the creation of a larger Veolia business with global aims.
It was thought that the CMA would take a similar approach to the Commission and seek undertakings along the lines of a commitment package, though Veolia did not offer any.
UK
As part of the proposed plans from Veolia, all of Suez’s operations in the UK will be transferred over to Veolia, subject to regulatory approval.
On 7 December, the CMA raised concerns over the plans, saying the deal could lead to a loss of competition for council contracts, leading to higher prices for local authorities, leaving taxpayers to foot the bill (see letsrecycle.com story).
It gave Veolia until 14 December to propose undertakings to address these concerns.
However, it today announced that Veolia said it would not do so the CMA will now begin phase 2 investigations.
Veolia informed the CMA that it would not offer undertakings
- Andrea Coscelli, chief executive, CMA
Decision
In a document published this morning, Andrea Coscelli, chief executive of the CMA, said: “On 7 December 2021, the CMA decided… that it is or may be the case that the merger consists of arrangements that are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation, and that this may be expected to result in a substantial lessening of competition.
“On 14 December 2021, Veolia informed the CMA that it would not offer undertakings to the CMA.
“Therefore… the CMA has decided to refer the merger to its chair for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013 to conduct a phase 2 investigation.”
Probe
After months of fevered speculation, on 14 May Veolia agreed to acquire 70.1% of Suez at a price of €20.50 (£17.71) per share (see letsrecycle.com story).
Veolia had already acquired 29.9% of Suez from French utilities firm Engie in October 2020, as it looked to launch a tender offer for the rest of the company (see letsrecycle.com story).
The CMA began its probe in October 2021 in relation to the completed 29.9% stake in the company, and the anticipated public takeover bid (see letsrecycle.com story).
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