A merger of the waste management companies Veolia and Suez could lead to a loss of competition and an increase in costs for local authorities, regulator warns.

The Competition and Markets Authority (CMA) launched an inquiry into the merger deal in October 2021 after concerns were raised about the possible loss of competition within the waste sector.

Veolia and Suez are the only suppliers in the UK who are active across the entire waste management chain, and are two of the few companies that are able to service the largest and most complex waste management contracts with councils.

In December 2021 the deal was referred for an in-depth Phase 2 investigation, which has focused on the eight markets within the waste and water management sector in which the two companies currently compete.

The CMA has provisionally found that the merger raises competition concerns in seven of the eight markets.

The regulator warned that this meant less choice when procuring key waste and water management services, which in turn could lead to an increase in costs which would be passed on to residents through council tax rises.

‘We all use waste and recycling services in some way, so it’s vital that these markets are competitive and provide good value for money. This is all the more important at a time when local authority budgets are already stretched and waste management services have to evolve to help achieve Net Zero targets,’ said Stuart McIntosh, chair of the CMA inquiry group.

‘We’ve heard from a number of customers, including local authorities, who are concerned that this merger could reduce competition in markets where choice is already limited, leading to higher prices or poorer services.

‘We share those concerns and want to make sure that commercial customers and councils don’t get a worse deal – leaving taxpayers to foot the bill at a time when household budgets are already under huge pressure.’