Merger inquiries take place where there is concern that two merging parties could gain too much market power, therefore resulting in a “substantial lessening of competition”.
In an announcement yesterday (12 October), the CMA said it accepted Veolia’s notice in relation to the completed 29.9% stake in the company, and the anticipated public takeover bid. It will now begin its investigation today.
The two French companies reached an “historic agreement” in April after a very public row spanning several months (see letsrecycle.com story).
Under the terms of the agreement, all of Suez’s operations in the UK will be transferred over to Veolia, subject to regulatory approval.
The CMA said its investigation in relation to the merger “will commence on the first working day after the date of this notice, ie 13 October 2021”.
The competition body added: “The deadline for the CMA to announce its decision whether to refer the merger for a Phase 2 investigation is therefore 7 December 2021”.
The involvement of the competitions body is not a surprise given the size of the two companies in the UK.
The CMA has already approached many of the largest waste management companies, and is also speaking with local authorities to determine their views.
The CMA first entered the equation after Veolia acquired a 29.9% stake in Suez last year.
It issued an initial enforcement order on 1 February 2021 concerning Veolia’s UK operations.
This prevented the company from taking ‘pre-emptive action’, which the CMA describes as “action that might prejudice the outcome of the reference and/or impede” its investigation.
Since then, a number of derogation notices have been issued, which gives consent to the merging parties to undertake certain actions that would otherwise be prohibited by the order.
Veolia has said hopes to complete the deal “by the end of 2021”, subject to the result of the CMA’s investigation.