The competition watchdog has provisionally cleared Sita and Tradebe to form a joint venture clinical waste management business.
The commission has provisionally concluded that the joint venture would not give rise to any significant loss of competition in any market, especially in the Birmingham and Gloucester areas.
This was said to be because another clinical waste management service provider SRCL was assessed as providing a significant alternative to the new business.
The commission also found that Sita and Tradebe regularly bid for the same tenders and do not constraint each other’s prices to a significant extent.
The merger is expected to reduce the supply costs of the companies, generating efficiencies, but these will in part be passed onto customers as the joint venture reduces prices to increase sales, according to the Commission.
Alasdair Smith, chairman of the Tradebe and Sita inquiry group and deputy chairman of the commission said: “We have provisionally concluded that the presence of a strong competitor (SRCL) will stop Tradebe/Sita from being able to raise prices as a result of the joint venture.
“In fact, some customers could benefit from lower prices as a result of increased rivalry, as the joint venture may well be able to compete more effectively with SRCL than the two companies could individually.”
The Office of Fair Trading is expected to produce a final report on the case by 14 April.