The Competition and Markets Authority (CMA) has warned that the merger between European Metal Recycling (EMR) and Metal and Waste Recycling (MWR) might have to be unravelled because of its impact on the market.
It said its provisional view was that the merger deal done in August 2017 could damage companies that buy and sell recycled metal because it would be likely to reduce competition, and said it could require all or part of MWR to be sold.
There is a now a period during which the CMA will consider representations on what it should do.
Among a series of potential remedies being considered was a requirement to sell all the MWR business – which would effectively negate the merger – or force the sale of some elements of it, including shredder feed in the south-east, ferrous and non-ferrous metals in London and tendered contracts in the West Midlands and north-east.
The CMA said its investigation had found that competition would be damaged because EMR was by far the biggest metal recycler in the UK and, while MWR was smaller, it was EMR’s strong rival in London, in the south-east for shredder feed and in the West Midlands and north-east for buying scrap from large industrial suppliers.
MWR was also a strong competitor for selling high-quality new production steel to mills.
Other competitors existed in the regions concerned but were not strong enough to prevent a substantial loss of competition, the CMA said, nor did it think that any new market entrant was likely to appear that would offer substantial competition.
The CMA warned in January that the merger could limit competition. At the time of the purchase, EMR said: “The two companies have many similar cultural values so we believe the acquisition process will go very smoothly. We are maintaining a ‘business as usual’ approach during the transition to minimise any impact for our employees and customers.”
An EMR statement said: ”These are preliminary findings and the process with the CMA is ongoing. It is therefore too early to comment at this point.”