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Industrial-water industry under scrutiny by the NMa

Commissioned by the Netherlands Competition Authority (NMa), research and consultancy firm EIM investigated the competitive situation in the Dutch industrial water industry. It found that this industry is characterized by a high level of concentration, meaning that a small number of players control a large share of the market. The NMa invites undertakings that are active in this industry to give their reactions to the investigation's findings.

Industrial water is water that is either used as means of production or as a resource in a production process. This includes drinking water that is used in industrial processes. Different types of players are active in the industrial-water industry: drinking water companies, industrial water companies (drinking water companies' subsidiaries), consultancy and engineering firms, suppliers of water treatment products and services, water management associations, and industrial firms. One of the factors that determine whether the level of competition is high or low is the purpose for which the water is intended to be used. For example, when looking at industrial-water treatment, competition is stronger than with industrial-water production and supply.

Drinking water is apparently used as a resource more than half of the time, the higher the water quality the industrial customer requires. This group of customers is therefore highly dependent on regional drinking water companies. These customers hardly have any alternatives to meet their water demands, because drinking water companies have a natural monopoly in their own service areas when it comes to the supply of drinking water (through water distribution lines). The investigation also reveals that most of the users of industrial water have in-house water-treatment facilities.

The NMa will use these new insights in, among other things, its assessment of the recent license application for the creation of a joint venture Evilim Industriewater B.V. by Dutch water companies Evides Industriewater BV and NV Waterleiding Maatschappij Limburg. Having ruled in September 2008 that this concentration would require a license, the NMa has now received the actual application and it will render a decision within 13 weeks.

The investigation (in Dutch) is available for download on the NMa's website (www.acm.nl).