UK watchdog orders Veolia to offload parts of UK business
CMA says merger would increase council costs
Britain’s competition watchdog has ordered the breakup of a merger between waste management firms Veolia and Suez, claiming local councils would face higher charges for recycling and rubbish collection.
The Competition and Markets Authority demanded Veolia sell three parts of the business acquired when it merged with Suez in a €13bn deal because of "substantial competition problems".
Both firms supply waste, water and recycling services to local councils and companies. The CMA said it was acting to "protect councils and businesses from likely higher prices and lower-quality services".
Suez's UK waste management services business, UK industrial water operation unit and Veolia's European mobile water services operations must all be offloaded to buyers approved by the CMA.
"We will now work with Veolia to ensure that appropriate buyers are found so that business, councils - and ultimately taxpayers - will not lose out," said CMA inquiry group chair Stuart McIntosh.
Veolia made £2bn in UK revenue - 10% of its global revenue - in 2020, while Suez generated £1bn, according to the CMA.
European Union and Australian competition authorities have also required "major divestments", the CMA said.
Veolia and Suez's 13 billion euro ($13 billion) tie-up won approval from the European Union in December last year, after a months-long legal dispute, and the deal closed in January.
In June, Veolia said it was planning to sell off Suez's UK waste business after the competition watchdog raised objections.
“Local authority budgets are already under strain, and this deal is likely to lead to them paying more and receiving a lower-quality service,” said McIntosh said.
“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.”
Veolia had already tried to placate the CMA by selling Suez’s waste business to Australian private equity house Macquarie for around £2bn.
Reporting by Frank Prenesti at Sharecast.com