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CMA breaks up waste merger between Veolia and Suez

Councils might have to pay more if the waste management companies were allowed to merge, the CMA said (Kirsty O’Connor/PA) (PA Archive)
Councils might have to pay more if the waste management companies were allowed to merge, the CMA said (Kirsty O’Connor/PA) (PA Archive)

The competition watchdog has stepped in to break up a waste management megamerger which it was worried could have led to higher charges for local councils.

Veolia will be forced to sell off most of the operations it got in the UK when buying fellow French rival Suez for 13 billion euros (£11 billion).

The businesses are both major players in the country, making £2 billion and £1 billion in revenue here respectively.

They supply waste, water and recycling services to local councils and companies.

For the Competition and Markets Authority (CMA), their combination created a worrying situation.

A company of their combined size would have the power to set prices or reduce the quality of the service it provides because there is not enough competition nearby.

Councils and companies without options would be forced to swallow the changes.

“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 Stuart McIntosh, chair of the CMA inquiry group.

“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 £2 billion.

It was the latest in a long list of moves that the companies took to get global competition authorities off their backs.