REG - Competition and Mkts - CMA unwinds Veolia / Suez merger in the UK

Veolia Environnement SAAnnouncement

25/08/2022 08:15

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RNS Number : 1991X  Competition and Markets Authority  25 August 2022

 

CMA unwinds Veolia / Suez merger in the UK

·    Waste management firm Veolia must sell 3 businesses as a result of
substantial competition problems identified by the CMA

·    Decision will protect councils and businesses from likely higher
prices and lower-quality services

Prior to the merger, Veolia and Suez were 2 of the largest suppliers of waste
management services in the UK.

The CMA has today required Veolia to sell 3 businesses after an in-depth
merger investigation concluded the merger gives rise to competition concerns
in a number of markets.

The Competition and Markets Authority (CMA) has 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 make up almost all of the overlap between Veolia's and Suez's
competing operations in the UK.

In response to the provisional findings of the Phase 2 inquiry, Veolia said
that it would sell the UK Suez waste business. The CMA will determine the
conditions of the sale, as well as the sales of the 2 water services
businesses.

The CMA will need to approve the purchasers of each business before the
completion of each sale.

Veolia and Suez are both global players in waste and water management. In
2020, the companies generated approximately £2bn and £1bn in the UK
respectively - roughly 10% and 7% of their annual global revenues.

Veolia and Suez are active across the full waste management supply chain. They
collect waste from households and businesses, sort it for recycling and
composting and dispose of the remaining waste - some of which is incinerated
to produce electricity. Many local authorities in the UK rely heavily on
either Veolia or Suez to meet their waste management needs. The companies also
supply water and wastewater management services to industrial customers.

Throughout the investigation, the CMA heard from a number of councils and
customers who were concerned about the potential impact of the merger on the
cost and quality of the services they receive. Ultimately, taxpayers and
businesses would have been left to cover any increase in cost.

Stuart McIntosh, Chair of the CMA inquiry group, said:

"Local authority budgets are already under strain, and this deal is likely to
lead to them paying more and receiving a lower-quality service. The negative
impact would have ultimately fallen on taxpayers at a time when they are
feeling the pressure of the cost of living crisis."

"Given our concerns about the merger, we have concluded that Veolia must sell
most of the operations it took over in the UK when it acquired Suez. We will
now work with Veolia to ensure that appropriate buyers are found so that
businesses, councils - and ultimately taxpayers - will not lose out."

The CMA's final report, published today, confirms its provisional findings
issued in May. It rules that the merger would lead to competition concerns in
5 waste markets and 2 water treatment markets. In each of these markets, the
merging businesses currently compete closely and would face limited
competition after the merger. The CMA found that this would be likely to
result in higher cost or lower quality services for councils, with knock-on
effects for taxpayers, as well as businesses across the UK.

The CMA launched an investigation into the deal between Veolia and Suez in
October 2021. The transaction was referred for an in-depth Phase 2 review,
which is led by an independent inquiry group, in December 2021.

This deal has been reviewed by a number of competition authorities across the
world. Major divestments were also required in the EU and in Australia.

For more information, visit the Veolia / Suez merger inquiry page
(https://www.gov.uk/cma-cases/veolia-slash-suez-merger-inquiry) .

Notes to editors:

 

For media enquiries, contact the CMA press office on 020 3738 6460
or press@cma.gov.uk (mailto:press@cma.gov.uk) .

 

The CMA found that the merger would lead to a Substantial Lessening of
Competition (SLC) in the following areas:

 

·    Collection of non-hazardous waste for municipal customers;

·    Operation and maintenance of material recovery facilities (i.e.
sorting of waste after collection) for municipal customers;

·    Operation and maintenance of Energy Recovery Facilities (i.e.
incineration) for municipal customers;

·    Supply of incineration services to customers in 2 local areas;

·    Collection of non-hazardous waste for commercial and industrial
customers;

·    Operation and maintenance of water and wastewater treatment
facilities for industrial customers; and

·    Provision of mobile water services to industrial customers.

 

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