Bundeskartellamt takes a critical view of the proposed merger between Remondis and DSD

The Bundeskartellamt has today informed the companies REMONDIS SE & Co. KG and DSD – Duales System Holding GmbH & Co. KG that, based on the results of its investigations so far, it intends to prohibit the proposed merger between the two companies. Remondis and DSD now have two weeks’ time to comment on the Bundeskartellamt’s draft decision in the matter.

Andreas Mundt, President of the Bundeskartellamt: “According to our preliminary assessment Remondis’ acquisition of DSD would impede competition between the dual systems for packaging recycling in Germany. This would lead to higher costs for DSD’s competitors, significant market share gains for DSD and finally higher prices on the market for dual systems.”

Remondis is by far Germany’s largest waste management company and is active on nearly all waste management markets in the country. These include the collection, sorting and reprocessing of sales packaging and its subsequent marketing or recycling.
DSD is the largest dual system for packaging recycling in Germany. The dual systems organise packaging recycling on behalf of manufacturers, importers or retailers (distributors) against the payment of a fee. Dual systems such as DSD then commission the actual waste management companies like e.g. Remondis with the collection, sorting and reprocessing of the packaging waste.

According to the Bundeskartellamt's preliminary assessment there are three reasons for the competition concerns about Remondis’ acquisition of DSD.

The merger would change the entrepreneurial conduct of Remondis and DSD. It would create incentives for Remondis to raise its prices for the necessary services required by DSD’s competitors involving the collection, sorting and reprocessing of packaging waste. According to the authority's preliminary assessment this would generate significant market share additions for DSD, squeeze out DSD’s competitors and ultimately lead to higher prices on the market for dual systems for packaging recycling.

Moreover, DSD could use its significant demand volume in future to squeeze Remondis’ competitors out of the market. Due to its high market share, DSD has a high level of access to quantities of sales packaging placed on the market by the distributors for sorting, reprocessing and recycling. The merged company could divert these waste quantities to Remondis’ plants for further processing and strategically subcontract remaining quantities for reprocessing to competitors.

Finally, both companies are active in the distribution of recycled hollow glass cullet (e.g. drink bottles or food jars). The proposed merger could create a dominant position on this market. Here the two companies would achieve joint market shares of 40 to 60 per cent.
In addition to Remondis and DSD eight other companies are involved in the proceeding as third parties. These will now also have an opportunity to comment on the Bundeskartellamt’s draft decision.

The proposed merger had initially been notified for examination to the European Commission because of the parties’ level of turnover. The parties had then applied for the merger to be referred to the Bundeskartellamt which was granted by the European Commission. The proposed merger was notified to the Bundeskartellamt mid-January.