Germany’s Bundeskartellamt, which is in charge of approving mergers and acquisitions, has prohibited Remondis SE & Co. from acquiring Dual System Holding GmbH & Co. KG (DSD).
Andreas Mundt, president of Bundeskartellamt, says, "The merger would have led to a considerable impediment of competition in the dual systems. Fears include higher costs for DSD competitors, significant DSD market share gains and, ultimately, higher packaging disposal prices.
“In addition, the two companies in the field of waste glass marketing come to questionable common market shares of 40 to 60 percent,” he continues.
“The commitments offered by the companies were not apt to address the competition concerns,” Mundt concludes.
Remondis, the largest waste management company in German, is involved in almost all waste disposal markets, including the collection, sorting and processing of packaging as well as the subsequent marketing or use.
DSD is the largest dual system in Germany. Dual systems organize packaging recycling for manufacturers, importers and distributors.
Mundt says, "Remondis, as a waste management company, would have an incentive after a merger to set DSD competitors' collection, sorting and processing prices higher than before the merger to penalize its competitors compared to its own DSD. With this strategy of raising DSD's competitors' prices, Remondis/DSD could then gain significant market share, displace competitors and ultimately push higher prices in the dual system market.”
Furthermore, DSD could use its considerable demand volume in the future to displace Remondis competitors, the regulators say. Because of its high market share among manufacturers, importers and traders, DSD has a high degree of access to the quantities of packaging required for sorting, processing and recycling. This material could be redirected from the merged company Remondis/DSD to Remondis for further processing and strategically deploy remaining subcontracts to competitors.
When Bundeskartellamt first indicated it was critical of the merger, the two companies offered pledges that included the divestment of two glass recycling facilities. However, the agency deemed the commitments were neither adequate nor great enough in the overall assessment to overcome their competition concerns.
The prohibition is not yet final. The parties can file a complaint against the decision with the Higher Regional Court of Düsseldorf within one month
"We welcome the decision of the Bundeskartellamt. It is right to prohibit the acquisition of DSD GmbH by Remondis. Other decisions would have severely disrupted the functioning of the market in the field of packaging disposal and would be at the expense of the middle class in the industry and consumers,” says Eric Rehbock, managing director of Germany’s BVSE.
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