CMA provisional findings rule against Veolia/SUEZ merger
Today (19 May), the Competitions and Markets Authority (CMA) published its provisional ruling on the potential merger of SUEZ and Veolia in the UK, with the body finding that the deal would ‘result in a substantial lessening of competition’.
The merger, CMA states, would reduce options for local councils and businesses when procuring key waste and water management services, leading to ‘more costly and lower quality services, and in turn, to higher council tax bills’.
The CMA’s investigation is focusing on eight markets within the waste and water management sector in which SUEZ and Veolia compete. In carrying out the assessment, the CMA says, the body took into account that the pair are ‘two of the few companies that are able to service the largest and most complex waste management contracts with councils.’
Provisionally, the CMA has identified competition concerns regarding the merger in seven of the eight markets investigated. In each of these markets, the body states, the two businesses currently compete closely and would face ‘limited competition’ after the deal. The CMA is ‘concerned’ that alongside higher costs and lower quality services for councils, taxpayers and UK businesses would also experience a knock-on effect.
The CMA originally launched an inquiry into the deal in October 2021, with the merger later referred for an in-depth Phase 2 investigation led by an independent inquiry group.
The body is now considering possible remedies, raising the possibility of a full divestiture of the entire UK waste business of either Veolia or SUEZ. The CMA’s ‘initial view’ is that this is ‘the only effective remedy’ that could address the waste management concerns raised in the provisional findings. At present, the body has not identified any comparable alternatives.
The CMA is welcoming responses from interested parties to its provisional findings until 9 June, and its notice of possible remedies until 2 June. These will be considered ahead of the final report, which is due by 17 July.
Stuart McIntosh, Chair of the CMA inquiry group, said: “We all use waste and recycling services in some way, so it’s vital that these markets are competitive and provide good value for money.
“This is all the more important at a time when local authority budgets are already stretched and waste management services have to evolve to help achieve Net Zero targets.
“We’ve heard from a number of customers, including local authorities, who are concerned that this merger could reduce competition in markets where choice is already limited, leading to higher prices or poorer services.
“We share those concerns and want to make sure that commercial customers and councils don’t get a worse deal – leaving taxpayers to foot the bill at a time when household budgets are already under huge pressure.”