The Competition and Markets Authority (CMA) has decided to launch an investigation into the completed acquisition by Veolia Environnement S.A. of a minority shareholding in Suez S.A. and the anticipated voluntary public takeover bid by Veolia Environnement S.A. for the remaining share capital of Suez S.A.
The Competition and Markets Authority (CMA) has decided to launch an investigation into the completed acquisition by Veolia Environnement S.A. of a minority shareholding in Suez S.A. and the anticipated voluntary public takeover bid by Veolia Environnement S.A. for the remaining share capital of Suez S.A.
The CMA served an initial enforcement Order under section 72(2) of the Enterprise Act 2002 in February 2021 in relation to the completed acquisition by Veolia Environnement S.A. of a minority shareholding in Suez S.A.
The Order says:
“The Competition and Markets Authority (CMA) has reasonable grounds for suspecting that it is or may be the case that Veolia Environnement S.A. (Veolia) and Suez S.A. (Suez), have ceased to be distinct as a result of the completed acquisition by Veolia of a shareholding of 29.9% in Suez from Engie S.A.”
The CMA is now considering whether to make a reference under section 22 of the Act in relation to the completed acquisition.
Veolia has also announced its intention to make a voluntary public takeover bid in relation to the remaining Suez share capital.
The CMA has issued the Order to ensure that no action is taken pending the Authority’s final determination of any reference under section 22 of the Act.
For the purposes of preventing pre-emptive action the CMA has made the following Order addressed to :
- Veolia
- Veolia UK Ltd
- Suez
- Ondeo Industrial Solutions UK Ltd
- Suez Water Technologies & Solutions Holdings UK Ltd, and Suez UK Group Holdings Ltd (collectively Suez UK)
The Order prohibits the companies from taking any action in relation to their individual businesses, except with the prior written consent of the CMA, which might prejudice a reference of the transaction under section 22 of the Act, including any action which might:
- lead to the integration of the Suez business with the Veolia business;
- transfer the ownership or control of the Veolia business or the Suez business or any of their subsidiaries; or
- otherwise impair the ability of the Suez business or the Veolia business to compete independently in any of the markets affected by the transaction.
The Order says that Veolia and Veolia UK must at all times during the specified period (except with the CMA’s prior written consent() ensure that:
- the Veolia business is carried on separately from the Suez business and the Veolia business’s separate sales or brand identity is maintained;
- the Veolia business is maintained as a going concern and sufficient resources are made available for the development of the Veolia business, on the basis of its pre-merger business plans;
- except in the ordinary course of business, no substantive changes are made to the organisational structure of, or the management responsibilities within, the Veolia business;
- the nature, description, range and quality of goods and/or services supplied in the UK by the Veolia business is maintained and preserved.
The Order says that except in the ordinary course of business for the separate operation of the two businesses, all of the assets of the Veolia business are maintained and preserved, including facilities and goodwill, and that none of the assets of the Veolia business are disposed of.
It also states that there should be no integration of the information technology of the Veolia business with the Suez business, and that the software and hardware platforms of the Veolia business should remain essentially unchanged, except for routine changes and maintenance.
The customer and supplier lists of the Veolia business should likewise be operated and updated separately from those of the Suez business.
In addition, any negotiations with any existing or potential customers and suppliers in relation to the Veolia business will need to be carried out by the Veolia business alone.
“For the avoidance of doubt the Suez business will not negotiate on behalf of the Veolia business or enter into any joint agreements with the Veolia business (and) all existing contracts of the Veolia business continue to be serviced by the Veolia business.”
The Order requires that no changes are made to key staff of the Veolia business, including their transfer from the Veolia business to the Suez business, and that “all reasonable steps are taken to encourage all key staff to remain with the Veolia business.”
The CMA said that “no business secrets, know-how, commercially-sensitive information, intellectual property or any other information of a confidential or proprietary nature relating to the Veolia business shall pass, directly or indirectly, from the Veolia business to the Suez business, except where strictly necessary in the ordinary course of business.
The same provisions, including preserving the organisational structure, key staff, disposal of assets, goods and services provided to customers, also apply to Suez.
Suez and Suez UK must also at all times during the specified period ensure that the Suez business is carried on separately from the Veolia business, the Suez business is maintained as a going concern and its separate sales or brand identity is maintained. Resources should also be made available for the development of the Suez business, on the basis of its pre-merger business plans.
Veolia, Veolia UK, Suez and Suez UK must ensure that each of their subsidiaries complies with the Order as if the Order had been issued to each of them.
Since 15 February the Chief Executive Officer of Veolia, Veolia UK, Suez and Suez UK (or other persons as agreed with the CMA) has been required to provide a statement to the CMA confirming compliance with the Order every two weeks.
Both companies are also required to actively keep the CMA informed of any material developments, including changes in key staff, all substantial customer volumes won or lost or substantial changes to customer contracts, any substantial changes in customers’ demand and substantial changes in contractual arrangements or relationships with key suppliers.
Click here to read the Order in full.
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