CMA expresses concerns over Veolia/Suez merger
The Competition and Markets Authority (CMA) today released a statement expressing concerns about the merger between waste management companies Veolia and Suez. The deal, the competitions body says, could lead to higher prices and lower quality services across ‘a range of waste management activities in the UK.’
This, the CMA states, is a result of the number of suppliers active within the UK that are able to service the largest and most complex waste management contracts with councils being already small.
The two companies are some of the largest suppliers of waste management services to councils and businesses in the UK, and are global leaders in the sector. Both companies are active across the waste management supply chain from the collection of waste to the operation of facilities for composting and incineration and landfill sites. The companies also supply water and wastewater management services to industrial customers.
A number of complaints from customers and other market participants had already been received under the investigation, with the CMA identifying a number of competition concerns that could lead to councils paying higher prices, a knock-on effect being experienced by taxpayers.
The agreement
Veolia originally announced its intention to acquire Suez in August 2020. An agreement was finalised in May of this year, which stated that Veolia had agreed to buy the 70.1 per cent of Suez it doesn’t already own for €20.50 per share.
The agreement laid out what the ‘new Suez’ would look like under the Veolia umbrella, expected to be created with a revenue of around €7 billion. The new Suez is expected to be owned by a consortium of investors, composed of Meridiam, GIP, and CDC/CNP Assurances.
‘Competition concerns’
Andrea Coscelli, Chief Executive of the CMA, said: “Councils spend hundreds of millions of pounds on waste management services. Any loss of competition in this market could lead to higher prices for local authorities, leaving taxpayers to foot the bill, and reduced innovation to achieve Net Zero targets. Everyone in the UK uses waste and recycling services in some way, it is therefore vital that this deal is subject to more detailed scrutiny if our concerns aren’t addressed.
“The CMA also identified competition concerns in several water management markets, where insufficient competition after the merger could mean that industrial customers would also have to pay higher prices.
“Veolia and Suez now have five working days to submit proposals to address the CMA’s concerns. If suitable proposals are not submitted, the deal will be referred for an in-depth Phase 2 investigation.”
