The 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 water and wastewater management services in the UK.

The CMA’s investigation found that as a result of the merger, the companies would become the largest provider of operation and maintenance of water and wastewater treatment facilities for industrial customers.

According to the competition regulator, the available evidence suggests that the companies may also have an advantage over their rivals because in addition to operating and maintaining water and wastewater treatment facilities, both are also active in the design and construction of technical solutions and equipment for these facilities.

The CMA’s investigation also found that as a result of the merger, the firms would be the largest UK supplier of mobile water services by a very large margin with a combined share of supply exceeding 80%.

With regard to waste management, the CMA has received a number of complaints from customers and other market participants during its investigation, including a large number of complaints from local authorities. The Authority has identified a number of competition concerns that could lead to councils paying higher prices, with a knock-on effect on taxpayers.

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. The transaction is being reviewed by a number of competition authorities globally.

Both companies are active across the waste management supply chain from the collection of waste to the operation of facilities for composting and incineration and landfill sites. The companies also supply water and wastewater management services to industrial customers.

In particular, the CMA is concerned that Veolia and Suez are 2 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.

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. 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.”

The CMA has decided, on the information currently available to it, that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

Veolia and Suez have been given 5 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.

Click here to download the CMA's decision in full