Watchdog nod for waste merger

The competition watchdog has cleared the way for Suez and Veolia’s $23.34bn tie-up, after accepting three divestiture undertakings from Veolia.

Crushing of metal waste extracted from landfill as part of City of Darwin's new contract with Veolia. Picture: Che Chorley

The competition watchdog has cleared the way for Suez and Veolia’s $23.34bn tie-up, after accepting three divestiture undertakings from Veolia.

With these court-enforceable divestitures, and the sale of $105m of assets to ASX-listed waste management group Cleanaway, the ACCC said the proposed acquisition is not likely to substantially lessen competition.

The ACCC had been concerned that the proposed acquisition would likely lead to higher prices or decreased services for national and multi-regional commercial and industrial customers for putrescible waste.

“Other areas of concern included putrescible waste disposal in Sydney, medical waste in Adelaide, dry waste disposal in Adelaide, and design and construction and operation and maintenance of large, mostly municipal, water and wastewater infrastructure,” ACCC chairman Rod Sims said.

Veolia and Suez are global companies that provide water management, waste management and other related services in Australia. They are two of the largest vertically integrated waste management companies in Australia and their merger will create a global heavyweight with combined annual revenues of €37bn ($57.8bn).

ASX listed waste management company Cleanaway had earlier this year been in the running to pick up all of Suez’s Australian operations in a deal worth $2.5bn, but that plan was foiled after Suez agreed to Veolia’s rival proposal.

Instead, Cleanaway reached an agreement to buy Suez’s Sydney assets for $105m in a deal completed on Monday.

The Veolia-Suez tie-up will also see a collection of both parties’ commercial and industrial putrescible waste assets in Sydney, Perth and Adelaide, Suez’s medical waste assets in Adelaide and some national commercial and industrial customer contracts divested to waste manager Remondis as part of the deal.

Mr Sims said the divestiture of putrescible waste assets to Remondis will allow it to compete with Veolia and Cleanaway for national and regional customers.

“Remondis has significant resources, experience and expertise from its operations in international markets,” Mr Sims said.

Suez Water will be divested to a consortium of investors as part of a global transaction, while Veolia’s interest in Integrated Waste Services will be divested to First Sentier Investors.

Mr Sims said until Suez’s recent sale of disposal assets to Cleanaway, Veolia would have controlled almost all processing capacity in Sydney if it had acquired Suez’s assets.

“The divestiture of Suez’s two landfills and five transfer stations to Cleanaway, combined with the divestiture of a transfer station to Remondis, will preserve the current market structure for putrescible waste processing and disposal in Sydney,” he said.

The ACCC’s approval follows European Union clearance for the tie-up last week.

Originally published as Watchdog nod for waste merger