European Commission approves Veolia/Suez merger

The acquisition of Suez by Veolia has today (15 December) been approved by the European Commission, conditional on the basis of total compliance with a commitments package.

Offered by Veolia, the package has been devised in order to eliminate the potential for competition concerns, which were originally raised with the initial announcement of the transaction. Both companies operate in the water and waste management sectors, specifically in the context of water treatment and waste collection and processing, so monopolisation of the market is a potential issue.

Initially, the European Commission states, it was feared that the transaction would lead to ‘significant horizontal overlaps on various markets in France and the European Economic Area (EEA)’. Markets which would have been affected by this include municipal water management; industrial water management within France and mobile water services within the EEA; the collection and processing of regulated waste; and the treatment of hazardous waste within France.

It was feared that the overlapping of the markets would risk eliminating the competitive pressure exerted by Suez, creating a market leader in the process at both a European and national level. This would have resulted in a reduced choice of service solutions for customers, limited to the merged Suez-Veolia entity.

In spite of these concerns, however, the European Commission’s investigation concluded that the proposed transaction ‘did not raise competition concerns in the other markets in the water and waste management sectors’, even in its creation of vertical and conglomerate links.

Proposed corrective measures

The contents of the commitments package includes the following:

• ‘The divestment of almost all Suez's activities in the non-hazardous and regulated waste management markets and the municipal water market in France’
• ‘The divestment of almost all Veolia's activities in the mobile water services market in the EEA’
• ‘The divestment of the vast majority of Veolia's activities in the French segment of the industrial water management market’
• ‘The divestment of part of Veolia's and Suez's hazardous waste landfill activities and all Suez's activities in the incineration and physico-chemical treatment of hazardous waste’

With the proposition of the amended measures, the Commission concluded that the transaction would no longer raise competition concerns, though the decision to greenlight the purchase still remains contingent on complete compliance with each of the commitments.

Executive Vice-President Margrethe Vestager, in charge of competition policy, commented: "Thanks to the very comprehensive commitments put forward by Veolia, the Commission has been able to approve the concentration of Veolia and Suez, two French incumbents in the water and waste sectors. By this decision, the Commission ensures that this transaction will not adversely affect competition in the water and waste markets, two sectors that are key to the European Green Deal and the circular economy."