Justice Department requires divestitures in Allied Waste acquisition

The Department of Justice announced that it has reached a settlement that will require Republic Services, Inc. and Allied Waste Industries, Inc. to divest commercial waste collection and disposal assets, serving 15 metropolitan areas, in order to proceed with Republic’s proposed $4.5 billion acquisition of Allied.

The settlement requires Republic and Allied to divest 87 commercial waste collection routes, 9 landfills and 10 transfer stations, together with ancillary assets and, in three cases, access to landfill disposal capacity. The Department said that the transaction as originally proposed would have resulted in higher prices for collection of municipal solid waste from commercial businesses or disposal of waste, or both, in these areas.

The Department’s Antitrust Division, along with seven Attorneys General, representing California, Kentucky, Michigan, North Carolina, Ohio, Pennsylvania and Texas, filed a civil antitrust lawsuit in to block the proposed transaction. At the same time, the Department and the seven Attorneys General filed a proposed settlement that, if approved by the court, will resolve the lawsuit and the competitive concerns.

“Without the divestitures required by the Department, consumers in 15 areas throughout the United States would have been harmed by a reduction in competition for commercial solid waste collection and disposal,” said Deborah A. Garza, acting assistant attorney general in charge of the Department’s Antitrust Division.

According to the complaint, the transaction, as originally proposed, would have substantially lessened competition in commercial waste collection and/or disposal services in the geographic areas of: Los Angeles; San Francisco, California; Denver, Colorado; Atlanta, Georgia; N.W. Indiana; Lexington, Kentucky; Flint, Michigan; Cape Girardeau, Missouri; Charlotte, North Carolina; Cleveland, Ohio; Philadelphia, Pennsylvania; Greenville-Spartanburg, South Carolina; and Fort Worth, Houston, and Lubbock, Texas.

In each of these areas, Republic and Allied are two of only a few significant firms providing commercial waste hauling or municipal solid waste disposal services. The acquisition would have eliminated a major competitor in each of these areas and may have resulted in higher prices and poorer service for consumers.

Under the terms of the proposed settlement, Republic and Allied must divest waste collection and/or disposal assets to a Department of Justice approved buyer or buyers as follows:

• Atlanta – collection routes and transfer station assets;
• Cape Girardeau, Missouri – collection routes and transfer station assets;
• Charlotte, North Carolina – collection routes, transfer station assets, and landfill assets;
• Cleveland – transfer station assets and landfill assets;
• Denver, Colorado – landfill assets;
• Flint, Michigan – landfill assets;
• Fort Worth, Texas – collection routes and landfill assets;
• Greenville-Spartanburg, South Carolina – collection routes, transfer station assets, and landfill assets;
• Houston – collection routes, transfer station assets, landfill assets, and access to landfill disposal capacity;
• Lexington, Kentucky – collection routes;
• Los Angeles – landfill assets;
• Lubbock, Texas – collection routes;
• Northwest Indiana – collection routes, transfer station assets, and access to landfill disposal capacity;
• Philadelphia, Pennsylvania – transfer station assets and access to landfill;
• San Francisco, California – landfill assets.

Under the proposed settlement, Republic would have to notify the Department and the relevant state before acquiring any waste collection and/or disposal operations in these areas for the next 10 years, the duration of the settlement.