Further investigation needed into acquisition of waste-management company AEB by AVR
The Netherlands Authority for Consumers and Markets (ACM) has decided that a further investigation is needed into the acquisition of waste-management company Afval Energie Bedrijf Amsterdam (AEB) by rival company AVR Afvalverwerking (AVR). The preliminary investigation revealed that the acquisition could lead to higher prices for waste processing, among other effects. The follow-up investigation will focus on the effects on the processing of household waste, commercial waste, and hazardous waste.
Both waste-management companies separate waste and process different kinds of waste and biomass. With the incineration of waste, AVR and AEB produce electricity and heating for, for example, district heating. Both companies are primarily active in the western part of the Netherlands.
Why is a further investigation needed?
AVR and AEB process large quantities of household and industrial waste. There are few other competitors in the western part of the Netherlands. Furthermore, these competitors are much smaller than AVR and AEB, and, because of their smaller capacities, cannot easily take on new customers.
In addition, both companies possess separation plants where usable raw materials are separated from the waste before it is incinerated. Other waste-management companies with separation plants are either at full capacity or are located further away. Therefore, customers of AEB and AVR, such as municipalities and businesses, at first glance, do not have suitable alternatives should AVR and AEB after the acquisition decide to raise their prices. The acquisition could lead not just to higher prices, but also to reduced quality and less innovation as competition is reduced. It could also lead to a less powerful incentive to invest in sustainability.
With regard to low-level hazardous waste, only a single, decent-sized competitor will remain in the Netherlands after the acquisition, but one that is already at full capacity. As a result, there are no alternatives in the Netherlands for businesses and governments to have this type of waste processed. The loss of competition due to the acquisition could lead to higher prices here as well.
What are the next steps?
If the companies wish to go ahead with the acquisition, they must file an application for an acquisition license with ACM. ACM will then continue its investigation. The investigation will focus on the market for the processing of household and industrial waste in the western part of the Netherlands. In addition, the market for the processing of low-level hazardous waste in the Netherlands will be examined. As part of the investigation, ACM will, among other activities, analyze data from tender processes in the waste-processing market, demand internal documents, and sit down with competitors and consumers.
ACM and acquisitions
With any merger, acquisition, or joint venture, there is a question of whether sufficient competition will remain on that market, right after the concentration as well as in the subsequent years. Competition ensures that products are of high quality, and that they are offered on the market at competitive prices. Competition also promotes innovation. That is why ACM decides in advance whether or not a company can acquire another company. ACM assesses whether the markets involved will continue to work well for people and businesses, now and in the future.