CMA says Rentokil must sell supply contracts to satisfy merger concerns

The Competition and Markets Authority said on Friday that Rentokil Initial will need to sell several large supply contracts to satisfy the regulator's concerns about its merger with Cannon Hygiene.

The decision follows an in-depth Phase 2 investigation which found that the merger between Rentokil and Cannon - two of the three major suppliers of washroom waste disposal - reduced customers' choice.

"The CMA found that this effect would not be offset by competition from other suppliers. Nor did it find evidence that future entrants into the market would have sufficient impact in the foreseeable future," it said.

As a result, Rentokil has been told to sell all contracts with customers that have premises nationally and across multiple regions, who were serviced by Cannon prior to the merger. These contracts will be sold to a different company to recreate the pre-existing competitive intensity for future national contracts. The company would need to be approved by the CMA.

Inquiry chair Anne Lambert said: "Our decision will preserve competition and choice for customers seeking a single supplier of washroom services across multiple locations.

"Where the CMA concludes that a merger will have a significant impact on competition, it will take action to restore that competition - regardless of whether a merger has been completed."