[GRRN] Solid Waste Industry Consolidation - New WMI/Eastern

RecycleWorlds (anderson@msn.fullfeed.com)
Mon, 24 May 1999 11:23:08 -0500

We filed comments with the US Department of Justice on April 27, 1999,
with regard to the new Waste Management/Eastern merger that is pending. In
those comments we first asked that as a condition for approving any mergers
among the large integrated national waste firms, all disposal facilities
should be divested from collection, because disposal is a bottleneck in the
waste industry that makes monopolization feasible.

In the alternative, we asked for a more modest modification with regard
to the Department's existing policy. Presently, DOJ is requiring
divestiture only of assets of the two merging firms in territories where
their operations overlap which raise the combined market share above the
larger firm's pre-merger share. However, they have then been permitting
the divested assets to be sold to other national consolidators who are
unlikely to remain strong competitors in the future. Consequently, the
present policy has seemed to countenance the mere shuffling assets among
oligopoly members as the only condition of approving the mega mergers.

We just received notice from Justice that, as expected, they denied our
first request to require divestiture of landfills from hauling. However,
they agreed with our alternative request that, in this case, Allied/BFI be
barred from its announced purchase of Eastern's divested assets:

"We do, however, agree with your conclusion that Waste Management's
divestiture of the decree assets to a firm such as Allied/BFI is
undesirable because it would significantly reduce competition and enhance
opportunities for cooperative post-merger price increases. We have so
informed Waste Managment, and we are prepared to have management and sale
of these crucial waste assets transferred to a trustee, if Waste Management
does not promptly divest these operations to a purchaser acceptable to the
United States."

This is the first time that Justice has shown any indication that it
may take a more serious look at the looming end game in the solid waste


Peter Anderson
RecycleWorlds Consulting
4513 Vernon Blvd. Ste. 15
Madison, WI 53705-4964
Phone:(608) 231-1100/Fax: (608) 233-0011