ACCC finds takeover would not substantially reduce waste management competition
Cleanaway Waste Management has been cleared to acquire Tox Free Solutions (Toxfree) after the Australian Competition and Consumer Commission (ACCC) decided the deal would not reduce competition significantly.
But the ACCC has warned that any future consolidation in the waste management industry will be put under heavy scrutiny as more and more companies joined forces.
ACCC commissioner Roger Featherston says the regulator consulted with over 70 interested parties when assessing the waste streams and regions where the two companies had competing operations.
These included hazardous waste processing in New South Wales, Victoria, Queensland, Western Australia and South Australia, medical waste collection in Victoria and used lubricating oil collection in WA.
“Although there may be a lessening of competition in some waste streams… in this case the proposed acquisition is unlikely to meet the threshold of a substantial lessening of competition,” Featherston says.
“We concluded that the threat of customers switching to competitors would constrain Cleanaway from increasing prices or decreasing service levels to a significant extent in any waste stream or geographic area.”
Despite observing that consolidation in the waste industry was growing, the competition provided by global waste companies such as Veolia, Suez and Remondis, as well as smaller local and regional operators, meant that there would still be sufficient competition in the market.
Cleanaway made its offer for Toxfree in December last year, offering to acquire all Toxfree’s issued capital for $3.425 per share.
The deal, which values Toxfree at about $671 million, will now go to a vote of Toxfree shareholders at a scheme meeting on May 3 – with the merger expected to be implemented on May 25 this year.
To prepare for the deal, Toxfree has been postponing longer term projects and made about 40 positions redundant in February, as we reported at the time.