CC requires Stericycle to sell Ecowaste Southwest
21 Mar 2012
The Competition Commission (CC) will require Stericycle Inc (Stericycle) to sell Ecowaste Southwest Limited, a company it bought last year, after concluding that the acquisition would lead to a loss of local rivalry leading to higher prices and lower service levels in parts of the South-West of England than would have been the case in the absence of the merger.
Stericycle’s UK subsidiary, SRCL Limited (SRCL), collects, treats and disposes of healthcare risk waste for the medical and other sectors throughout England and Wales. Prior to the acquisition Ecowaste Southwest provided the same service in the South-West of England through its treatment facility at Avonmouth, Bristol.
Healthcare risk waste is a category of healthcare waste that requires treatment prior to disposal and includes needles and syringes, dressings, medicines, and anatomical waste. It requires treatment prior to disposal because it is potentially infectious or could otherwise be harmful to health. The large majority of healthcare waste is produced by major NHS organizations such as Acute Trusts and Primary Care Trusts (PCTs). It is also produced by the private healthcare sector and a number of other settings.
The CC provisionally ruled against the merger in December. Since then it has been looking at further evidence about the distances over which firms that provide healthcare risk waste services can compete. It concluded that for customers in the surrounding area, SRCL’s facility at Frome and Ecowaste Southwest’s facility at Avonmouth were close competitors.
The CC has also considered other remedy options proposed by Stericycle as alternatives to a full divestment to address the loss of competition. However, it has concluded that a full sale of the Ecowaste business would be the only effective remedy.
CC Chairman and Chairman of the SRCL/Ecowaste Inquiry Group, Roger Witcomb, said:
'We have looked carefully at how local this market is and the extent to which rival firms located further away can compete and we believe that the loss of competition would be harmful for customers in the Avonmouth area. As the majority of customers are NHS organizations, the danger is that any resulting price rises would be borne by the public purse.
'We also considered carefully alternative proposals before concluding that a full sale of the Ecowaste Southwest business would be the only effective way to maintain competition. Ecowaste Southwest is a profitable business and we believe it will be possible to find a suitable purchaser.'
Notes for editors
1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.
2. The CC previously investigated a merger involving Stericycle in 2006.
3. The members of the SRCL/Ecowaste Inquiry Group are: Roger Witcomb (CC Chairman and Inquiry Group chairman), Roger Finbow, Tony Stoller and Jonathan Whiticar.
4. The Office of Fair Trading (OFT) referred the case on 25 August and the CC has been asked to decide whether the acquisition has resulted, or may be expected to result in a substantial lessening of competition (SLC) in any market or markets for goods or services in the UK. The CC is expected to publish its final report by 4 April 2012.
5. The Enterprise Act 2002 empowers the OFT to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.
6. The CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period. On 25 January the CC announced the extension of the inquiry by eight weeks.
7. Further information on this inquiry, including the terms of reference and other key docu-ments, as well as on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from the CC website at: www.competition-commission.org.uk.
8. Enquiries should be directed to Rory Taylor or Siobhan Allen or by ringing 020 7271 0242.
