WIREDGOV

The OFT yesterday referred the completed joint venture between Tradebe Environmental Services Limited (Tradebe) and Sita UK Limited (Sita) to the Competition Commission following concerns the joint venture could raise prices and reduce quality.

Tradebe provides waste management services, including the collection and disposal of clinical waste, to medical and other sectors throughout England. It owns treatment facilities in Doncaster, Birmingham, Bristol and Fawley. Sita runs similar services in England and Wales and owns treatment facilities in Wrexham, Rochester, Salford, Enfield and Redditch.

After careful consideration, the OFT found the joint venture raises competition concerns over the collection, processing and disposal of healthcare risk waste for 'large quantity generator' customers in the wider areas around Birmingham and Gloucester. The OFT's evidence indicated that Tradebe and Sita competed closely in the Midlands and South West of England where they both operate medical waste plants. The OFT is not confident there is sufficient competition from other competitors in these areas to prevent the joint venture from raising prices or reducing quality.

In the Gloucester area, evidence showed that the parties would face competition only from SRCL, while in the Birmingham area the OFT considered that customers' choice would be limited to the joint venture, SRCL and GW Butler.

Chris Walters, OFT Chief Economist and Decision Maker in this case, said:

'This deal brings together two major providers of waste management services in the wider areas around Birmingham and Gloucester. The loss of rivalry here may result in a substantial lessening of competition, potentially leading to higher prices or reduced services to customers in the local area, including hospitals and other public sector customers.

'Some of these customers have expressed concerns, or indicated they considered the parties to be close competitors. Given that we have competition concerns we are referring the merger for a fuller investigation to the Competition Commission.'

The CC is expected to report by 14 April 2014.

NOTES 

1. Large quantity generators produce large amounts of healthcare risk waste (HRW) from individual locations. Large quantity generators include Acute Trusts (Hospitals) and companies which collect HRW, but then subcontract treatment of the waste. Other producers of HRW, such as dentists and GP surgeries, typically only produce a small amount of waste at any individual site and therefore are referred to as small quantity generators.
2. The Reference Test - the OFT has a duty to make a reference to the Competition Commission if the OFT believes that it is or may be the case that a relevant merger situation has been created; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
3. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million ('the turnover test'); or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced ('the share of supply test'). 
4. The CC may extend the 24-week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.
5. The text of this decision will be placed in the mergers section as soon as is reasonably practicable.