Bundeskartellamt clears takeover of RWE Umwelt by Remondis subject to conditions and obligations

The Bundeskartellamt has cleared the takeover of RWE Umwelt AG (“RWE Umwelt”) by Remondis Beteiligungs GmbH (“Remondis”) subject to conditions and obligations. Remondis is part of the Remondis (formerly: Rethmann) group, currently the second-largest waste disposal company in Germany. Following the Bundeskartellamt’s decision shares in companies, facilities and collection contracts in the areas of the collection and transport of recovered glass, the reprocessing of recovered glass and the recycling of refrigerating and freezing equipment have to be divested as well as Remondis’ share in Interseroh AG (“Interseroh”). Before the merger was notified about 30 per cent of RWE Umwelt's domestic turnover volume had already been hived off, e.g. some of RWE Umwelt’s activities in North Rhine-Westphalia and the new German Länder as well as activities in Hesse and Lower Saxony. Foreign investments were also sold to third parties prior to the merger.

Both Remondis and RWE Umwelt are active in all of the major German waste disposal markets. The parties to the merger already eliminated obvious competition problems in the markets for the collection and transport of residual waste, in neighbouring collection markets and in the markets for the downstream disposal of municipal waste, particularly in North Rhine-Westphalia and the new German Länder by hiving off some activities of RWE Umwelt in the run-up stage. Therefore no further obligations and conditions were required for these markets.
However, the merger would have led to competition problems in several other markets. According to the Bundeskartellamt’s findings a dominant oligopoly of Remondis and Interseroh would thus have been created in the market for the area-wide disposal of waste from commercial sources (e.g. retail branches). The main reason for this was the fact that Remondis holds a minority share in Interseroh and appoints the chairman of the supervisory board while RWE Umwelt is Interseroh’s biggest competitor. A further special feature is the fact that Interseroh itself is not active in operations but uses other waste disposal companies, such as Remondis, for these activities, which to a large extent are themselves also shareholders in Interseroh. RWE Umwelt was one of the few large waste disposal companies which did not hold shares in Interseroh. The merger would have eliminated RWE Umwelt’s competition potential. To prevent this the merger was cleared subject to the suspensive condition that before the merger is put into effect Remondis irrevocably transfers its shares in Interseroh to a trustee, sells them within a certain time limit and cuts all further links with Interseroh, particularly management interlocks.
In the market for the collection and transport of recovered glass in the North Rhine-Westphalia area and the markets for reprocessing recovered glass and recycling refrigerating and freezing equipment the merger would have resulted in Remondis having positions of single firm dominance. The company would have achieved market shares which exceeded (in some cases considerably) the threshold for presuming dominance and gained a very considerable market share advantage over all other competitors. Under the obligations Remondis now has to sell, within fixed time limits, a total of twelve collection contracts for recovered glass in North Rhine-Westphalia and neighbouring Länder, three glass reprocessing plants and shares in two further glass reprocessing plants as well as three recycling plants for refrigerating and freezing equipment. In the market for the collection and transport of recovered glass in North Rhine Westphalia Remondis’ market share will be smaller after the merger than it was before. There will be no market share addition in the market for glass reprocessing, in the market for the recycling of refrigerating and freezing equipment the addition will be marginal and will not result in Remondis’ share exceeding 30 per cent.

The President of the Bundeskartellamt, Dr Ulf Böge, stated: “The Bundeskartellamt has ensured that in many areas the Remondis / RWE Umwelt merger does not result in stronger market positions than those already held by one of the parties before the merger. The project was thus to be cleared in accordance with the provisions of the Act against Restraints of Competition (ARC). Nevertheless the Bundeskartellamt looks on the growing trend of concentration in the waste management sector with concern. Not only is the remaining 30 per cent of RWE Umwelt’s volume of domestic turnover up for sale but it is to be feared that, as in comparable cases in other markets, competitors which have not been successful could see themselves forced into “catch-up mergers” to compete with the new market leader. A large number of disposal markets are already demonstrating a tendency towards oligopolisation which is furthered by numerous interlocks within the sector. The Bundeskartellamt will continue to act against this development within the possibilities offered to it by law.”