The Australian Competition and Consumer Commission (ACCC) has approved Cleanaway Waste Management’s $671 million takeover offer of rival Tox Free Solutions.
Cleanaway and Tox Free both supply waste management services, including the collection, treatment and disposal of municipal, commercial and industrial, liquid, hazardous and medical waste. They also provide various types of industrial services.
Cleanaway announced its intention to buy Tox in December 2017, offering a cash price of $3.425 per share, valuing Tox Free at $671 million. Tox Free has operations across four core service lines, including; waste, technical and environmental, industrial and health. The company’s national network includes 29 facilities and a fleet of 895 waste management vehicles.
ACCC Commissioner Roger Featherston said the acquisition was a complex matter for the watchdog.
“This was a complex matter for the ACCC. We consulted extensively with over 70 interested parties including customers, competitors, regulators and industry bodies. There was a mix of views on the competitive impacts, with some expecting little change, and others highlighting concerns,” Featherston said.
The ACCC’s investigation focused on waste streams and regions where the parties’ operations overlap, and the competitive implications of Cleanaway’s overall growth and increased vertical integration. Some of the key areas of focus were:
- Hazardous waste processing, particularly in NSW, Victoria, Queensland, SA and WA, and hazardous waste collection (including household hazardous waste collection)
- Non-hazardous liquid waste processing, particularly in NSW/ACT and Queensland
- Medical waste collection, particularly in Victoria, and medical waste processing, particularly in NSW, and
- Used lubricating oil collection, particularly in WA.
“Although there may be a lessening of competition in some waste streams, such as hazardous waste collection and processing, and used lubricating oil collection, we considered that, in this case, the proposed acquisition is unlikely to meet the threshold of a substantial lessening of competition,” Featherston said.
“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.”
“Competitors include major global waste companies such as Veolia, Suez and Remondis, as well as smaller local and regional operators,” Featherston said.
The ACCC noted the growing consolidation in the waste industry and any future merger or acquisition involving any large suppliers of waste management services will be closely investigated.
“Increased vertical integration, particularly between waste collection and waste processing, was also an issue raised by industry participants. We considered, however, that the increased vertical integration arising from this transaction would be unlikely to substantially lessen competition because of competitive constraints imposed by alternative suppliers.”