Veolia’s proposed acquisition of Suez not opposed, subject to divestitures

21 December 2021

The ACCC will not oppose the proposed acquisition of Suez by Veolia after accepting three court-enforceable divestiture undertakings from Veolia. With these divestitures, and the sale of certain assets to Cleanaway, the ACCC considers the proposed acquisition is not likely to substantially lessen competition.

Veolia and Suez are global companies that provide water management, waste management and other related services in Australia. They are two of the largest vertically integrated waste management companies in Australia.

The ACCC was concerned that the proposed acquisition would likely lead to higher prices or decreased services for national and multi-regional commercial and industrial customers for putrescible waste. Other areas of concern included putrescible waste disposal in Sydney, medical waste in Adelaide, dry waste disposal in Adelaide, and design and construction and operation and maintenance of large, mostly municipal, water and wastewater infrastructure.

‘Putrescible’ waste refers to solid waste which contains organic matter such as food, general household and commercial waste.

“This was a very complex global transaction affecting over 60 local markets in Australia. Industry participants expressed concerns about a range of issues in many of these markets, which we investigated closely,” ACCC Chair Rod Sims said.

The undertakings accepted by the ACCC require Veolia to divest the following assets to three separate purchasers that have been approved by the ACCC:

  • A collection of Veolia and Suez’s commercial and industrial putrescible waste assets in Sydney, Perth and Adelaide, Suez’s medical waste assets in Adelaide and some national commercial and industrial customer contracts will be divested to Remondis.
  • Suez Water will be divested to a consortium of investors as part of a global transaction. Suez Water supplies design, construction, operation and maintenance services for large scale water projects, such as desalination plants.
  • Veolia’s interest in Integrated Waste Services in Adelaide will be divested to First Sentier Investors, which includes a landfill, transfer station and recycling centre that are used for the disposal of dry waste collected from commercial and industrial customers.

The ACCC had consulted on a separate undertaking involving the divestiture to Cleanaway of two landfills and five transfer stations capable of accepting putrescible waste in Sydney. The transaction between Cleanaway and Suez completed on 18 December 2021, meaning that this undertaking was no longer required by the ACCC.

“After the upfront divestiture of putrescible waste assets to Remondis, the ACCC considers that Remondis will be in a position to compete more aggressively with Veolia and Cleanaway for national and multi-regional commercial and industrial customers,” Mr Sims said.  

“Remondis has significant resources, experience and expertise from its operations in international markets.”

In Sydney, until Suez’s recent sale of disposal assets to Cleanaway, Suez and Veolia were each other’s closest competitors for the up-stream processing and disposal of putrescible waste. They owned the only two putrescible landfills in Sydney.

“Veolia would have controlled almost all the processing capacity in Sydney if it acquired Suez’s assets, meaning processing and disposal prices would be likely to increase. The divestiture of Suez’s two landfills and five transfer stations to Cleanaway, combined with the divestiture of a transfer station to Remondis, will preserve the current market structure for putrescible waste processing and disposal in Sydney,” Mr Sims said.

Concerns were also raised that the proposed acquisition would reduce the number of vertically integrated medical waste operators in Adelaide from three to two, which would likely lead to increased prices for medical waste collections.

“The divestiture of the Adelaide medical waste assets to Remondis ensures that three key competitors for these services remain,” Mr Sims said. 

Veolia is also divesting Suez Water in several countries to a consortium of investors known as ‘new Suez’ to address competition concerns. The undertaking offered to the ACCC in relation to these assets will ensure that a large, global provider of these services will remain to compete with Veolia in Australia.

The divestiture of Veolia’s interest in Integrated Waste Services will ensure it remains an independent competitor supplying dry waste disposal services in Adelaide.

Further information, including the undertakings accepted by the ACCC, can be found on the ACCC’s public register here: Veolia Environnement S.A - Suez S.A.

Background

Veolia is a public company listed and headquartered in France, with operations in 48 countries. In Australia, Veolia supplies water management, waste management and energy solutions through various wholly owned subsidiaries.

Suez is a listed holding company headquartered in France with global operations. In Australia, Suez supplies water management and technology, and waste management and resource recovery services.

Remondis is a worldwide environmental services company, supplying waste and water management services.

Cleanaway is an Australian, ASX listed company. Cleanaway is the largest waste management company in Australia, supplying recycling, waste management and industrial services. It does not have operations in water management.

First Sentier Investors is a global asset management business with various investments in waste globally, including energy-from-waste

On 5 April 2021, Cleanaway and Suez entered into a separate agreement for Cleanaway to purchase certain post-collection waste assets in Sydney, including two landfills and five transfer stations.

On 14 May 2021, Veolia and Suez entered into a Combination Agreement. The Combination Agreement included the creation of a ‘new Suez’, comprising certain water assets that would be sold to a Consortium of investors, namely Global Infrastructure Management, LLC, Meridiam S.A.S., and Caisse des Dépôts et Consignations Group (including CNP Assurances S.A.).

On 9 December 2021, the ACCC announced that it would not oppose Cleanaway’s proposed acquisition of parts of Suez’s waste assets in Sydney.

Release number: 
220/21
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Media Team - 1300 138 917, media@accc.gov.au

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