The European Commission has approved the proposed acquisition of Suez by Veolia under the EU Merger Regulation.
The approval is conditional on full compliance with a commitments package offered by Veolia.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Thanks to the very comprehensive commitments put forward by Veolia, the Commission has been able to approve the concentration of Veolia and Suez, two French incumbents in the water and waste sectors.
Thanks to the very comprehensive commitments put forward by Veolia, the Commission has been able to approve the concentration of Veolia and Suez
“By this decision, the Commission ensures 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.”
Veolia and Suez are leaders in the water treatment and waste management sectors.
Concerns had previously been raised by UK’s Competition and Markets Authority (CMA) has found that 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.
The Commission’s investigation
The Commission says its investigation revealed that the transaction would have raised competition concerns.
More specifically, the transaction would lead to ‘significant horizontal overlaps’ in various markets in France and in the European Economic Area (EEA), mainly in municipal water management, industrial water management in France and mobile water services in the EEA, the collection and treatment of non-hazardous and regulated waste and the treatment of hazardous waste in France.
Such overlaps would risk eliminating the competitive pressure exerted by Suez and creating a market leader at European and national and/or local level, depending on the markets concerned.
Customers would therefore have faced a reduced choice of service solutions, often limited to the merged entity, without having any real bargaining power, according to the investigation.
The investigation confirmed that the proposed transaction did not raise competition concerns in the other markets in the water and waste management sectors.
The transaction also creates vertical and conglomerate links, which, however, do not raise competition concerns, it said.
Proposed corrective measures
To address the Commission’s competition concerns, Veolia offered a commitments package including:
- The divestment of almost all Suez’s activities in the non-hazardous and regulated waste management markets and the municipal water market in France;
- The divestment of almost all Veolia’s activities in the mobile water services market in the EEA;
- The divestment of the vast majority of Veolia’s activities in the French segment of the industrial water management market; and
- The divestment of part of Veolia’s and Suez’s hazardous waste landfill activities and all Suez’s activities in the incineration and physico-chemical treatment of hazardous waste.
The Commission said these structural commitments ‘eliminate entirely the competition concerns’ with regard to Veolia’s acquisition of Suez.
Veolia said it welcomes the European Commission’s decision to approve the acquisition of Suez.
It said this is a ‘decisive step’ in the creation of a ‘global champion of ecological transformation’.
It said the green light from the European Commission is a ‘key factor’ in the realisation of Veolia’s industrial project.
I am very much committed to ensure 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.
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 ensure 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 proposed merger has received 15 out of 18 approvals from the main competition authorities, with the examination still underway by the competition authorities in Chile, the UK and Australia.