Veolia and SUEZ agree to final terms of proposed sale, CMA says

The Competition and Markets Authority (CMA) has announced that Veolia and SUEZ have agreed to the final terms regarding the potential sale of SUEZ’s UK waste business – in line with the CMA’s decisions as published in its Final Report.

On 3 November, the CMA published two documents outlining the terms of any potential sale. The first is a notice of acceptance after both Veolia and SUEZ submitted ‘final undertakings’ and setting out how it will meet the CMA’s order. Secondly, a copy of the final undertakings – which are the same as the CMA set out in August.

Veolia has approved to give the following undertakings:

• Provide the CMA ‘as soon as practicable’ with a shortlist of potential purchasers for each of the divestment businesses for the CMA’s formal approval.
• Provide the CMA with sufficient information regarding each potential purchaser for which Veolia seeks formal approval.

In August, the CMA concluded that Veolia must sell substantial parts of the merged business: SUEZ’s UK waste management services businesses, SUEZ’s UK industrial water operation and maintenance services business, and Veolia’s European mobile water services business. These businesses, the CMA said, make up almost all of the overlap between the two companies’ competing operations in the UK.

Veolia’s agreement to sell the UK waste division of SUEZ to SUEZ S.A (the new SUEZ), is still to be approved.

The merging companies previously agreed to sell the UK business, announcing a £2 billion deal with Australian asset management company Macquarie in August.

History of the merger

Veolia first announced its intention to acquire SUEZ in August 2020, with a formal merger agreement signed by April 2021. Veolia agreed to buy the 70.1 per cent of SUEZ it didn’t already own for €20.50 (£17.26) per share.

The CMA launched an investigation into the deal in October 2021. After its referral for an in-depth Phase 2 review in December, the CMA stated that the merger could lead to higher prices and lower quality services across ‘a range of waste management activities in the UK.’

Veolia and SUEZ generated approximately a respective £2bn and £1bn in the UK in 2020 – around ten and seven per cent of their respective annual global revenues.

The CMA’s investigation heard from a number of councils and customers who expressed concerns about the potential impact of the merger on the UK market – the two companies supply waste management services to a number of local authorities, and water/wastewater services to industrial customers. According to the CMA, taxpayers and businesses would have been ‘left to cover any increase in cost’ resulting from a lessening of competition.

In a statement, Veolia stated that it ‘strongly disagreed’ with the CMA’s analysis of the concerned markets and ‘deplores the lack of shared understanding of the issues related to our sectors of activity’.

The CMA’s final report comes just under six weeks later than its original release date, with the body being granted an eight-week extension due to the ‘scope and complexity of the inquiry’.

This deal has been reviewed by a number of competition authorities across the world. The European Commission approved the deal in December, conditional on total compliance with a commitments package that sought to eliminate competition concerns. Major divestments were also required in Australia.