The competition regulator has announced that it will progress its investigation of the proposed merger between Veolia and Suez to the next stage.

The Competition and Markets Authority (CMA) warned earlier this month that the merger could lead to a loss of competition in the supply of several waste and water management services in the UK.

The CMA subsequently gave the companies five working days to respond to the regulator’s concerns, but on the 14 December Veolia said it would not respond.

The regulator will now progress the investigation to phase 2.

In the document detailing the decision to refer, Andrea Coscelli, chief executive of the CMA, wrote: ‘On 7 December 2021, the Competition and Markets Authority (CMA) decided under section 33(1) of the the Act that it is or may be the case that the Merger consists of arrangements that are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation, and that this may be expected to result in a substantial lessening of competition (SLC) within a market or markets in the United Kingdom (the SLC Decision).’

‘Pursuant to section 73A(1) of the Act, if a party wishes to offer undertakings for the purposes of section 73(2) of the Act, it must do so before the end of the five working day period specified in section 73A(1)(a) of the Act…On 14 December 2021, Veolia informed the CMA that it would not offer such undertakings to the CMA,’ the document continues.

‘Therefore, pursuant to section 33(1) and in accordance with section 34ZA(2) of the Act, the CMA has decided to refer the Merger to its chair for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013 to conduct a phase 2 investigation.’