The Competition and Market Authority (CMA) has found that European Metal Recycling (EMR) must sell five of the sites it bought from Metal Waste Recycling (MWR) due to competition concerns that prices might worsen for suppliers and customers.
Having considered responses to the provisional findings of its Phase 2 merger inquiry published in June, and further analysis of the evidence, an independent inquiry group from the CMA is concerned the merger between EMR and MWR could lead to a worse deal for customers and suppliers.
The inquiry group’s final report of the in-depth (phase 2) investigation, published today (14.8.18), said the merger would harm the choices available to suppliers (such as car breakers) that supply shredder feed (scrap metal that needs to be shredded) in the South East of England, and others such as car manufacturers that sell large volumes of scrap metal through tendered contracts in the West Midlands and the North East of England.
It also found that the merger is likely to lead to a worse deal for customers in the UK that buy a certain type of scrap metal known as new production steel.
“Having an efficient and competitive metal recycling industry is good for the environment and is important for both suppliers and waste metal customers, including those in the automotive and steel manufacturing industries.”
The CMA is requiring that EMR sell five of the sites it bought from MWR: three in the West Midlands, one in the North East and one in the South East.
In other areas of the business, including the buying (not via a tendered contract) and selling of general scrap metal, the CMA did not find the merger would substantially weaken competition.
EMR is the largest recycler of scrap metal in the UK, while MWR is the fourth largest.
Inquiry chair Lesley Ainsworth, said: “Having an efficient and competitive metal recycling industry is good for the environment and is important for both suppliers and waste metal customers, including those in the automotive and steel manufacturing industries.
“Over the course of our inquiry we surveyed, spoke to or received comments from over 850 suppliers and customers. The evidence shows that EMR’s purchase of MWR is likely to harm competition in a number of areas and there is a material risk that prices for some suppliers and customers could worsen.
“To ensure competition is maintained, we are requiring EMR to sell off some of the sites that it bought from MWR.”