European Metal Recycling (EMR) and its parent company Ausurus Group have been penalised over the handling of a merger with Metal & Waste Recycling (MWR).
The Competition & Markets Authority (CMA) fined EMR and Ausurus £150,000 each for “unauthorised integration” of MWR’s business during an investigation.
EMR bought London-based MWR in August 2017. A CMA investigation resulted in EMR being told to sell off five MWR sites because of concerns about the impact on prices.
On 11 September 2017, the CMA issued an initial enforcement order (IEO) under section 72 of the Enterprise Act 2002 in order to separate EMR and MWR’s business while the investigation was carried out.
But the CMA said EMR had nevertheless directed MWR customers to make payments into Ausurus bank accounts. It ruled that this constituted “unauthorised integration” and a breach of the IEO.
A second breach involved failing to give the MWR managing director a “clear delegation of authority to take decisions without consulting, or obtaining the permission of, Ausurus or EMR”.
A CMA ruling said Ausurus and EMR had “no reasonable excuse” over the breaches.
The ruling said: “The CMA considers that a penalty of £150,000 for each breach, giving a total penalty of £300,000 (which is below the statutory maximum of 5% of global turnover) is an appropriate and proportionate penalty.”
An EMR UK spokesperson said: “This has been a very difficult process for EMR, particularly as a degree of integration had already occurred prior to the commencement of the CMA enquiry and the imposition of the IEO.
“EMR has endeavoured at all times to comply fully with the terms of the IEO. The nature of the two alleged infractions which led to this fine are quite technical in nature and entirely inadvertent. When they were brought to the attention of EMR by the CMA, immediate remedial action was taken.
“While naturally disappointed with the outcome of the enquiry, EMR remains committed to complying fully with the requirements of the CMA.”
In an exclusive interview with MRW, EMR UK’s chief executive Andrew Brady said the CMA had set a “new rationale” over what market share a company was allowed to have.
He said: “We accepted [the CMA’s] decision and we are in the process of packaging those sites up to be sold.
“I think, possibly, it needed this to set the benchmarks to know what market shares were acceptable, whether it was on a national basis, whether it was on a regional basis. So what we will do is, in future, we will ensure that any acquisitions we look at, we will put that test to it first.
“Whereas before there probably wasn’t the test, or the test that we had was a very different test that we used when it was the Mergers and Monopolies Commission, because the CMA is a relatively new body.”
Read MRW’s Big Interview with Andrew Brady in the upcoming February 2019 issue