Sector invited to comment on Veolia/Suez impact

The Competition and Markets Authority (CMA) has set a deadline of 5pm on 11 February for the waste sector and others to submit comments on Veolia’s proposed takeover of Suez in the UK.

Veolia Suez
Veolia has agreed to sell Suez UK to Macquarie but SUEZ has first refusal

In Paris, Veolia has agreed to acquire its rival, Suez, for a price of €20.50 (£17.71) per share (see letsrecycle.com story).

As part of the agreement, all Suez operations in the UK are proposed to be transferred to Veolia, prompting a CMA probe.

The CMA published the response deadline today (28 January) alongside an issues statement setting out the scope of its inquiry into whether the merger would lead to a “substantial lessening of competition” in the UK.

The CMA said this would help parties that wished to make “representations”.

Having completed phase 1 of its inquiry, the CMA will now focus on the issues it identified, which include:

  • “complex” waste management contracts procured by local authorities
  • collections services for both municipal and commercial and industrial (C&I) waste
  • the operation and maintenance of local authority-owned energy from waste plants
  • waste incineration services in the Teesside, Wilton 11, Marchwood, and Kemsley areas
  • the supply of organic waste composting services at open windrow facilities in certain parts of the Midlands

The competition regulator invited interested parties to contact it at Veolia.Suez@cma.gov.uk if they believe there are any additional relevant issues it should also consider.

Competition

Should the CMA conclude that the merger would result in a substantial lessening of competition within one or more markets in the UK, the competition regular says, it will consider whether “remedies might be appropriate”.

When considering these remedies, the CMA says, it will also consider any relevant customer benefits that might arise because of the merger.

‘Largest suppliers in the UK’

According to the issues statement, Veolia’s turnover in 2020 was approximately £22 billion worldwide and £2 billion in the UK.

Only Biffa would remain as a “strong competitor” for C&I waste collection services if the merger went ahead, the CMA says (picture: Shutterstock)

Suez had an approximate turnover of £15 billion worldwide, the issues statement says, and £1 billion in the UK.

Veolia and Suez “overlap” each other in a wide range of non-hazardous waste management services across the entire supply chain, the CMA says, and are among the largest suppliers in the UK. The CMA is to consider what effect this will have on each’s ability to compete with rivals.

Only Biffa would remain as a “strong competitor” in the supply of non-hazardous C&I waste collection services if the merger went ahead, the issues statement says.

‘Complex contracts’

The CMA says there is a subset of “particularly complex” waste management contracts procured by local authorities that tend to have a small number of “credible” bidders.

The CMA says Veolia and Suez are two of a limited number of companies that can service complex contracts

The complexity arises from a range of factors such as the inclusion of several waste management services in single tenders, the overall value and duration of the contract, or specific local authority requirements, the competition regulator says.

Veolia and Suez are “strong suppliers” in competing for such complex contracts, the CMA says, because they have decades-long experience in managing a range of services, a presence across most stages of the waste management lifecycle, a nationwide footprint, access to “comprehensive global research, development and innovation capabilities”, and a strong financial standing.

The CMA also says the companies are two of a limited number that can service complex contracts.

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