NMa: further investigation into proposed joint venture in Dutch industrial-water industry
The Netherlands Competition Authority (NMa) will further investigate the creation of the proposed joint venture of Evilim Industriewater BV (Evilim) by Dutch water companies Evides Industriewater BV (Evides Industriewater) and NV Waterleiding Maatschappij Limburg (WML).
The NMa believes that the creation of the joint venture might result in the proposed joint venture attaining such a dominant position that might leave buyers on the market for production and distribution of high-quality industrial water with too few alternatives. This applies to buyers that do not meet their demand for water themselves. The water companies sought permission from the NMa to create the joint venture on April 22nd, 2008. The NMa has decided that the water companies involved need to apply for a license for the creation of this joint venture. If Evides Industriewater and WML will indeed apply, then the NMa will decide within 13 weeks whether it approves the creation of the joint venture.
Evides Industriewater and WML not only provide drinking water in large parts of the Netherlands. They also treat waste water, and they produce and distribute industrial water. Evides Industriewater distributes industrial water in the southwest of the Netherlands. WML is the water provider in the southern province of Limburg. The joint venture will result in joint control of Evilim by Evides Industriewater and WML.
The NMa distinguishes between low-quality and high-quality industrial water. The former is, for example, cooling tower suppletion water, which sometimes can be pumped from a river, untreated, and then be used as industrial water. High-quality industrial water is water of significantly higher quality than drinking water. Several industrial businesses use this kind of water in various production processes. Production of high-quality industrial water requires so-called custom-made installations. Building and operating these kinds of installations requires specialists. Not all industrial-water users are able to do this themselves. Therefore, specialist water suppliers are often contracted. WML, Evides Industriewater and a few other, smaller suppliers currently offer these products and services. Large, foreign suppliers are currently not considered to be viable alternatives, according to an NMa survey, as these foreign suppliers are not fully acquainted with the Dutch administrative network that is essential for entering the market. Foreign suppliers have thus not been able to gain a firm footing in the Dutch market.
Competition will decrease if Evides Industriewater and WML start a joint venture, and effective competition in the Dutch market, or in parts thereof, might be significantly impeded as a result.
If the investigation enters a Licensing Phase, the NMa intends to investigate, among others, which users will be able to meet their demand for high-quality industrial water themselves. The NMa will then also look into the nature of the entry barriers that foreign suppliers encounter.