Bingo confirms waste industry price hike inquiry

The competition regulator has opened an inquiry into price rises in NSW’s building and demolition waste industry last year.

Bingo and other waste operators are under investigation by the ACCC.

The competition regulator has opened an inquiry into price rises in NSW’s building and demolition waste industry last year, with the largest operator, Bingo Industries, among the companies under official investigation.

The Australian Competition & Consumer Commission has confirmed that it initiated the move late last year after prices rose on July 1. That move sparked tension among some customers in the ­sector, although neither the ACCC nor Bingo would confirm whether complaints over the new price tariffs had sparked the official inquiry.

The investigation had not previously been disclosed by the ACCC.

However Bingo decided, following market rumours of an ­investigation, to issue a public statement confirming that it and other companies had been contacted by the regulator.

Bingo said it was “one of a ­number of market participants ­involved in the investigation”, while reaffirming its 2020 financial year earnings guidance range of $159m to $164m.

“Bingo takes all such matters seriously,” chief executive Daniel Tartak said.

“We will continue to be transparent and co-operative in our dealings with the ACCC, our shareholders and all our stakeholders.”

The waste management operator increased its prices by up to 15 per cent from July 1, reflecting higher operating costs across the industry in a move that it forecast in August would lead to margin expansion this financial year.

Bingo sealed a $577m takeover of rival Dial A Dump Industries last year, with the acquisition ­including the Eastern Creek plant, the biggest landfill and waste ­recycling plant in the southern hemisphere with capacity of up to two million tonnes a year and 15 years of landfill life remaining at the site.

Macquarie said the investigation was probably about assessing ­independence rather than the price rise itself.

“This investigation seems to us to be aimed at assessing procedural independence rather than the fact that prices were adjusted higher — especially in the context of ACCC comments at the time of its approval of the Dial A Dump deal,” Macquarie analysts said in a client note. “We have previously noted though that the balance between price and volume remains a source of uncertainty for Bingo in the current market context. At the current valuation, the stock is fully priced, in our view.”

Bingo’s integration of Dial A Dump — approved by the competition regulator last February — will be completed by June. The company’s group earnings margin is ahead of schedule in returning to its long-term target of 30 per cent within a two-year period — as flagged at its 2019 financial ­results in August.

Meanwhile, Bingo has noted that the NSW pricing increase from July would deliver a net benefit to the business this year.

Bingo closed flat at $2.85 on Tuesday, against a 1.4 per cent fall in the benchmark S&P/ASX 200 Index.