European Commission approves merger Suez and Veolia

The European Commission approves the acquisition of Suez by Veolia. This decision was announced the 14th of December in a Press Release. According to vice-president Margrethe Vestager, in charge of competition policy, the merger could be approved thanks to the very comprehensive commitments put forward by Veolia. But the approval is conditional on full compliance with a commitments package offered by Veolia.

Veolia and Suez are the largest suppliers of waste and water services in Europe and global leaders in the sector. The investigation of the Commission revealed that the initially planned merger, would raise competition concerns in various markets in France and in the European Economic Area (EEA). In the water sector it concerned the market for municipal water management, industrial water management in France and mobile water services in the EEA. The overlap would eliminate the competitive pressure exerted by Suez and create a market leader leaving consumers with a reduced number of service solutions and no bargaining power. To address the Commission’s competition concerns, Veolia offered a commitments package.

Measures

These commitments packages include the divestment of almost all Suez’s activities in the non-hazardous and regulated waste management markets and the municipal water market in France and the divestment of almost all Veolia’s activities in the mobile water services market in the EEA. The measeures eliminated competitive concerns raised by the EU Commission with regard to Veolia’s acquisition of Suez. Therefore, the proposed transaction, as modified by the commitments, would not raise any competition concerns.

Veolia is delighted

Not long after the announcement, the CEO of Veolia, Antoine Frérot, shared his thoughts on social media by stating: “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”. Frérot aims to become stronger against the Chinese competition and he wants to develop Veolia into a ‘French world champion of ecological transformation’.

Extra investigation in UK

The Competition and Markets Authority (CMA) in the UK remains concerned after the European Commission approved the merger of Suez and Veolia. In an investigation they found that the merger could lead to a loss of competition in the supply of water and wastewater management services in the UK. 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. According to the CMA, as a result, the merger could lead to higher prices and lower quality services across a range of waste management activities in the UK. Veolia and Suez have been given five working days to submit proposals to address the CMA’s concerns. If suitable proposals are not submitted to address the competition concerns, the deal will be referred for an in-depth Phase 2 investigation.