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Cleanaway’s (ASX:CWY) proposed acquisition of a company called CityWide Waste has led to the competition regulator issuing a notice of concern.
Cleanaway, a $6B+ market cap company, has seen its shares jump +0.75% in early trades on Thursday. So, make of that what you will.
But in a media release, the ACCC on Thursday said Cleanaway’s acqusition leaves it in a position to possibly dominate the Melbourne waste collection market in an unfair manner.
CityWide Waste, the ACCC noted, is owned by the City of Melbourne Council; but the regulator went on to highlight Cleanaway’s “already strong position in Melbourne,” according to the ACCC Commissioner, Dr. Philip Williams.
The ultimate issue is that Cleanaway already owns a number of disposal facilities and that CityWaste’s operation of a key disposal facility close to the Melbourne CBD could give it too much power.
Smaller waste collection players could be forced to come to Cleanaway – which, in turn, could exploit that vertical structure.
“We are concerned that the expansion of Cleanaway’s waste disposal network may enable Cleanaway to charge downstream collection providers higher prices and reduce service quality,” Williams said.
“Rival waste collectors, particularly commercial and industrial collectors, require access to waste disposal facilities at competitive rates, and competitive service levels, to compete effectively for customers.”
CWY last traded at $2.73/sh.
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