The Competition and Markets Authority (CMA) has ordered Veolia to sell three substantial parts of its already-completed purchase of Suez’s water and waste management businesses in the UK.
It comes as councils raised concerns about sharp increases in cost as a result of the merger and follows an in-depth investigation by the CMA, which found the merger gives rise to competition concerns in five waste markets and two water treatment markets.
It also found 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.
Earlier this month, Veolia agreed to sell Suez’s waste business in the UK to Macquarie Asset Management in a deal worth €2.4 billion (£2bn) to resolve competition concerns.
The CMA will determine the conditions of this sale as well as the sales of two water services businesses – Suez’s UK industrial water operation and maintenance services business and Veolia’s European mobile water services business.
The three businesses make up almost all of the overlap between Veolia’s and Suez’s competing operations in the UK.
Veolia and Suez were two of the largest suppliers of waste management services in the UK prior to the merger, with the companies generating around £2 billion and £1 billion in the UK respectively in 2020 – roughly 10% and 7% of their annual global revenues.
They are active across the full waste management supply chain, collecting waste from households and businesses, sorting it for recycling and composting and disposing of the remaining waste, some of which is incinerated to produce electricity.
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.”