Waste Management applies again for clearance to acquire Waste Care
Published27 May 1999
The Commerce Commission has today received a second application from Waste Management NZ Limited for clearance to acquire Waste Care Limited.
The Commission's Commerce Act Manager, Geoff Thorn, said that the new application includes an undertaking that Waste Management would divest some assets if the proposed acquisition went ahead.
Waste Management has stated that the divestment is commercially sensitive and has asked the Commission to declare it confidential. Mr Thorn said that the Commission is discussing Waste Management's request for confidentiality with the company and, in the meantime, will treat the nature of the divestment as confidential.
On May 14 the Commission declined to clear Waste Management's first application because of dominance concerns in the Auckland regional market for disposal of solid, non-hazardous waste. This is, in effect, the market for landfills.
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets. Parties can apply for a clearance, which the Commission will grant if it is satisfied that dominance is not acquired or strengthened.
The Act gives the Commission 10 working days to make a decision but allows for extensions if necessary. In this case, working day 10 is June 10.
Background
The Commission declined Waste Management's first application because that proposal would have resulted in the company owning two of the four landfills in the region, Redvale and Whitford. However, the two competing landfills, Rosedale and Greenmount, will be full and closed by 2003. Meanwhile Redvale could remain open for another 25 years and Whitford for another 17.
If there was no new entry Waste Management would have a monopoly in this market within four years.
The Commission found that barriers to entering the market were high because of the scarcity of suitable sites, Resource Management Act constraints and the high costs of developing a landfill. It concluded that new entry to this market would be neither likely nor sufficiently timely to constrain a combined Waste Management/Waste Care.
It also concluded that alternatives to landfills, such as recycling and incinerators, are unlikely to constrain Waste Management if the proposed acquisition were to go ahead.
