The Cartel Office wants to ban megafusion in the waste industry
May Germany's largest waste disposal company merge with the largest recycling company? The Bundeskartellamt warns that this could lead to a "hindrance to competition".
It has been more than five months since Germany's largest waste management company Remondis bought the Dual System Germany (DSD), which organizes packaging recycling. Now, the takeover could fail due to opposition from the Federal Cartel Office.
According to a statement, the antitrust authorities want to ban the merger - but companies still have two weeks to comment on the draft decision.
DSD is the largest dual system in Germany. Dual systems organize the packaging recycling on behalf of and against payment of the manufacturer or dealer. They commission the actual disposal companies such as Remondis, who then pick up, sort and process the packaging waste.
"According to Preliminary Assessment, the acquisition of DSD by Remondis would hamper competition in the dual systems in Germany," said Andreas Mundt, President of the Federal Cartel Office. "There are fears of higher costs for DSD competitors, significant DSD market share gains and ultimately higher prices in the dual system market."
Earlier, DSD was with the Green Dot Monopolist, on intervention of the European Commission emerged after the millennium but also competitors. Although DSD has lost market share with the Green Dot in recent years, the company continues to play a key role in waste management.
Remondis is also a leader in its industry: The company is already about four times as large as the next smaller competitor.
Specifically, the Bundeskartellamt expresses concerns in three points:
- Remondis could increase the prices for waste management services for the dual systems. This could displace smaller DSD competitors from the market.
- DSD, in turn, could harness its high demand for waste to displace Remondis' competitors by routing the waste primarily to Remondis disposal facilities.
- Both companies recycle glass and would reach a market share of 40 to 60 percent after a merger.
With the acquisition, Remondis would also become the market leader in the Green Dot and Yellow Bags business. This could also affect consumers, as manufacturers and retailers could open up potential fee increases for recycling yellow bags to the prices of products such as yoghurt or soft drinks.