Veolia: UK sell-off of Suez is ‘drastic’ response to regulator

Veolia is taking the ‘drastic decision’ to sell off the UK operation of Suez as part of the proposed acquisition of the international Suez group, saying it strongly disagrees with the UK competition regulator.

A statement from Veolia criticises the findings of Competition and Markets Authority (CMA) that a merged Veolia and Suez would lead to a loss of competition in the UK. The CMA found this might mean more costly and lower quality services, and higher local bills as local authorities and some businesses would have less choice when procuring key waste and water management services. It does not affect any joint operation outside the UK.

The deal, effectively a takeover of Suez in the face of its bitter opposition, was struck in April 2021. The CMA then launched an investigation to the French-owned groups’ business in the UK.

Veolia says: ‘The CMA remains the only competition authority that hasn’t performed a definitive assessment of the effects of the merger on its domestic market. In order to terminate this long period of waiting… Veolia has informed the CMA of its intention to sell all of Suez’s waste activities in the country.

‘This drastic decision is an effective response to the intransigence of the CMA. Veolia strongly disagrees with their analysis of the concerned markets and deplores the lack of shared understanding of the issues related to our sectors of activity.’

Veolia says it is convinced that bending the companies’ teams, know-how and expertise are the best way to respond effectively and rapidly to the needs of its clients and to tackle major challenges of climate change, energy security, loss of biodiversity and shortages of materials.

‘We regret that the CMA’s analysis will not allow the Group to deploy the full potential of the ecological transformation in the UK but it does not reduce our commitment to this region. It does not affect the overall scope of Veolia’s project, whose capacity to create value remains intact.

‘On the other hand, these disposals will free up significant cash flow to finance new developments, particularly in the energy sector, which will enable the company to return to a portfolio of activities balanced between water, energy and waste.

Based on 2020 revenue reports, Veolia (£1 929 million – EUR 2 274 million) is the biggest supplier of waste management services to councils and businesses in the UK while Suez (£720 million) is fourth largest. Both are active across the supply chain, from collections to the operation of facilities for composting and incineration, to landfill sites. The companies also supply water and wastewater management services to industrial customers.