Veolia has proposed the sale of Suez’s UK waste business following the UK’s Competition and Markets Authority (CMA) finding the merger of Veolia and Suez could lead to a ‘loss of competition’ in the supply of several waste and water management services in the UK.
Veolia said that it has informed the CMA of its intention to sell all of Suez’s waste activities in the UK.
Veolia said this “drastic decision” is in response to the “intransigence” of the CMA. It said it “strongly disagrees” with the CMA’s analysis of the concerned markets and “deplores the lack of shared understanding of the issues related to our sectors of activity”.
Veolia and Suez are two of the largest suppliers of waste management services to councils and businesses in the UK and global leaders in the sector and the transaction is being reviewed by a number of competition authorities globally.
We regret that the CMA’s analysis will not allow the Group to deploy the full potential of the ecological transformation in the United Kingdom, but it does not reduce our commitment to this region
Both companies are active across the waste management supply chain from the collection of waste to the operation of facilities for composting and energy recovery and landfill sites.
The companies also supply water and wastewater management services to industrial customers.
The CMA says it received a number of complaints from customers and other market participants during its investigation and it has identified a number of “competition concerns” that could lead to councils paying higher prices, with a knock-on effect on taxpayers.
In particular, the CMA says it is concerned that Veolia and Suez are two of only a small number of suppliers active within the UK that are able to service the “largest and most complex” waste management contracts with councils.
As a result, the merger could lead to higher prices and lower quality services across a range of waste management activities in the UK, the CMA said.
Full potential
Veolia said the merger already proves itself useful with the addition of new skills, new technologies and new geographies.
“It will further accelerate the implementation of the Impact 2023 strategic program, strengthening Veolia’s international footprint and increasing its capacity for innovation,” it said.
“We regret that the CMA’s analysis will not allow the Group to deploy the full potential of the ecological transformation in the United Kingdom, but it does not reduce our commitment to this region,” Veolia said in a statement.
“It does not affect the overall scope of Veolia’s project, whose capacity to create value remains intact.
“On the other hand, these disposals will free up significant cash flow to finance new developments, particularly in the energy sector, which will enable the company to return to a portfolio of activities balanced between water, energy and waste.
“At a time when energy sovereignty and the development of alternative energy sources are both strategic and ecological imperatives, Veolia intends to pursue its development in this sector in synergy with the Group’s other activities.
“This divestment will also allow to accelerate the company’s debt reduction, making Veolia more agile than ever as it approaches the end of Impact 2023.
“It will provide additional financial flexibility while Veolia embarks on a new strategic program placing innovation at the heart of its growth model.”