The Australian Competition and Consumer Commission (ACCC) has flagged potential problems with Cleanaway’s waste management (ASX:CWY) planned acquisition of Citywide Service Solutions’ waste and recycling division.
In June this year, Cleanaway had agreed to acquire the division for $110 million. As part of the transaction, Cleanaway committed to redeveloping the Dynon Road Waste Transfer Station into a larger, more efficient and modern postal collection facility. It was expected to cost around $35 million, with an additional $10 million contribution from the City of Melbourne during Cleanaway’s first four years of ownership.
ACCC Commissioner Dr Philip Williams expressed concern that the acquisition could lead to reduced competition, particularly in Melbourne’s central and western areas, by consolidating Cleanaway’s control over critical waste disposal facilities . “Our preliminary view is that the proposed acquisition would eliminate the close competitive tension between Cleanaway’s and Citywide Waste’s facilities,” Dr. Williams said. “We are concerned that the expansion of Cleanaway’s waste disposal network may allow Cleanaway to charge higher prices to downstream collection providers and reduce the quality of service. Rival waste collectors, particularly commercial and industrial ones, require access to waste disposal facilities at competitive rates and service levels, to compete effectively for customers.”
Dynon Road Transfer Station, located just 5km from Melbourne’s CBD, is Victoria’s second largest waste transfer station, handling over 200,000 tonnes of waste per year.
The ACCC is inviting feedback from the public, with entries open until 28 November 2024.
Melbourne-based Cleanaway operates one of the largest waste management networks in Australia, with more than 7,600 employees and 5,900 vehicles. Its services range from collection, recycling and disposal, with facilities such as landfills, transfer stations and recycling plants nationwide. Citywide Waste, on the other hand, has been serving Melbourne’s municipal and industrial customers since 1995, managing key assets such as the Dynon Road transfer station.
The shares are trading up 0.92% at $2.74.