The European Commission has given its approval to the French waste and water management company Veolia's €13 billion acquisition of its rival Suez, with the ruling conditional on compliance with commitments made by the two companies.
The Veolia technical landfill centre in Pedreira, Brazil. Credit: Veolia
The Veolia technical landfill centre in Pedreira, Brazil. Credit: Veolia
The deal that was reached in April brought to an end one of France's bitterest corporate takeover disputes in years, marked by months of ferocious conflict, including legal action and an attempt by Suez to ringfence its French water business from its larger rival that was later dropped after an agreement was reached.
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The Commission's investigation initially raised several concerns that the deal would lessen competition, leading to customers facing a reduced choice of service options. To address these concerns, Veolia offered an extensive divestment package, which the Commission has accepted.
In a statement, EU Competition Commissioner Margrethe Vestager said: "Thanks to the very comprehensive commitments put forward by Veolia, the Commission has been able to... ensure that this transaction will not adversely affect competition in the water and waste markets, two sectors that are key to the European Green Deal and the circular economy."
Solutions proposed by the companies include selling off Suez's waste and water activities in France, as well as some international assets into a new company called New Suez. Shareholders of the new entity include Meridiam and Global Infrastructure Partners, state-backed Caisse des Depots and CNP Assurances.
Veolia will also divest the majority of its French industrial water treatment assets and its mobile services businesses in Europe. Suez, meanwhile, is to sell off all of its assets in hazardous industrial waste treatment. Both firms will sell some of their hazardous waste landfill activities.
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Antoine Frérot, Chairman and CEO of Veolia, said: "I am delighted with this decision, which confirms the strength and the relevance of our industrial project and its ability to meet the challenges of the global climate and environmental crisis.
"This step opens the final phase of the merger, which is only a matter of weeks away. I am very much committed to ensuring that it takes place under the best possible conditions for all our stakeholders and I will make sure that all our social commitments are respected throughout this process."
The merger has so far received approvals from 15 of the 18 competition authorities with investigations still underway in Australia, Chile and the UK.
Last week, the UK's Competition and Markets Authority (CMA) announced its decision that the merger would be expected to have a negative impact on competition in the water management market, and that it could lead to higher prices and lower quality waste management services.
Andrea Coscelli, Chief Executive of the CMA, said: "Councils spend hundreds of millions of pounds on waste management services. Any loss of competition in this market could lead to higher prices for local authorities, leaving taxpayers to foot the bill and reduced innovation to achieve net-zero targets.
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"Everyone in the UK uses waste and recycling services in some way, it is therefore vital that this deal is subject to more detailed scrutiny if our concerns aren’t addressed.
"The CMA also identified competition concerns in several water management markets, where insufficient competition after the merger could mean that industrial customers would also have to pay higher prices."
He added that the two companies had five working days to submit proposals that would address the CMA's concerns, or face an in-depth Phase 2 investigation.
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