BINGO receives green light from ACCC for Dial A Dump acquisition

BINGO Industries has welcomed the Australian Competition and Consumer Commission’s (ACCC) announcement that it would not oppose Bingo’s proposed acquisition of Dial A Dump Industries (DADI).

It comes after BINGO accepted a court-enforceable undertaking from BINGO to divest its recycling facility in Banksmeadow, NSW.

Earlier this year, BINGO offered to sell its Banksmeadow processing plant to ease ACCC competition concerns regarding its $578 million purchase of Dial-a-Dump.

In August last year, BINGO announced it intended to acquire fully integrated NSW waste and recycling business Dial A Dump Industries for $577.5 million.

The acquisition includes its Genesis Transfer Station in Alexandria, Genesis Waste Facility (landfill, materials processing facility, and recycled products processing facility) at Eastern Creek and a collections fleet of 55 vehicles.

BINGO Managing Director and Chief Executive Officer Daniel Tartak said the ACCC decision was an important step in realising the company’s vision and five-year strategy to be a fully vertically integrated business and diversify into new markets in NSW.

“Our acquisition of DADI will not only be transformational for BINGO, but also for recycling in the greater Sydney region.

“Our development of a Recycling Ecology Park at Eastern Creek will allow us to process and recycle every type of waste, accelerate our vertical integration and compete more effectively with the larger local and international players.

“The ability to further consolidate more of our recycling, processing, distribution and landfill at a single site will deliver significant economic benefits. It allows us to further grow waste volumes, by freeing up space across our network of resource recovery facilities, some of which can be better utilised as transfer stations,” he said.

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DADI is a fully integrated recycling and waste management services provider in NSW. DADI has operations across the waste value chain from collections to recycling, landfill and recycled product sales. The principal asset is the waste management and resource recovery facility at Eastern Creek that spans approximately 55 hectares and is located in the Western Sydney growth precinct. It has an approved capacity of up to two million tonnes per annum between its resource recovery facility and landfill, and approximately 15 years of remaining landfill life.

BINGO expects to achieve run-rate cost synergies of around $15 million per annum through internalisation of waste volumes, operational efficiencies, and rationalisation of overheads over a two-year period.

ACCC clearance satisfies a condition precedent relating to the acquisition of DADI, and transaction settlement is expected to occur in March 2019.

“This will help ensure our vision for a more sustainable Sydney is realised, as we push for a waste-free Australia and move to build a circular economy through diverting waste from landfill,” Mr Tartak said.

“It will provide our customers with a better and more sustainable solution for both building and demolition (B&D) and commercial and industrial waste,” he said.

According to an ACCC statement, there are larger players than BINGO in the waste industry, such as SUEZ, Veolia and Cleanaway, but BINGO is the most significant player in Sydney B&D collection and processing.

“The transaction raised a number of significant concerns. Ultimately, we have concluded that the proposed acquisition, taking into consideration the divestiture undertaking, would be unlikely to substantially lessen competition in any market,” ACCC Chair Rod Sims said.

A key issue for the ACCC was the loss of competition in B&D waste processing in Sydney’s Eastern Suburbs and inner city.

“The proposed divestment of the Banksmeadow facility will maintain competition for B&D waste processing in Sydney’s Eastern Suburbs and inner city,” Mr Sims said.

The other key concern related to the removal of future competition between Bingo’s and Dial-a-Dump’s non-putrescible landfill.

“The Eastern Creek landfill site that Bingo will acquire is a strategically significant asset given that some of Sydney’s other dry waste landfills are due to close in the next few years and approval of new landfills is likely to be difficult,” Mr Sims said.

“The current practice of taking waste to Queensland will also become more costly after the introduction of the Queensland landfill levy.”

Post-acquisition Bingo is expected to hold a significant share of Sydney dry landfill in terms of both annual throughput and remaining airspace.

A key issue was whether Bingo would be able to stop competing B&D waste processors from having access to dry landfill at competitive prices due to its increased vertical integration.

“After an extensive investigation, including consultation with many industry participants, we considered that most building and demolition waste processors would have sufficient dry landfill alternatives to Bingo,” Mr Sims said.

Due to the introduction of the Queensland landfill levy, the ACCC considers it likely that Sydney dry landfill prices will rise this year regardless of the proposed acquisition. This will provide an incentive for increased recycling of B&D waste and incentives for more landfill capacity being made available in NSW.

BINGO announced that the board has approved the implementation of an on-market buy-back of up to $75 million of its ordinary shares.

As foreshadowed in BINGO’s half year results announcement, BINGO’s strong balance sheet together with the current trading value of BINGO shares supports the buy-back as a capital management initiative.

The buy-back is expected to commence on 15 March 2019 and will end 12 months from the date of this announcement.

The timing and number of shares purchased under the on-market buy-back will be contingent on Bingo’s share price and prevailing market conditions.

 

Proposed funding model for battery stewardship scheme

The Battery Stewardship Council has released a briefing note on the process of Australian Competition and Consumer Commission (ACCC) authorisation for a voluntary battery stewardship scheme.

A Battery Reference Group was established in 2014 to design a scheme for handheld batteries. In 2015, the focus shifted from all handheld batteries to rechargeable batteries only.

However, the Battery Reference Group and the Battery Industry Working Group were reconfigured into the Battery Stewardship Council in 2018 to ensure that both government and industry representatives were involved in the design. The scope is now all batteries that are subject to market failure, with lead acid batteries not included. Following round one of consultation, it is proposed that all handheld batteries will be included in the scheme.

Some of the key scheme features in draft mode are a shared responsibility with government support for expansion in processing and best practice technology, infrastructure funding and improved safety, quality, import controls and enforcement. It also aims to improve the economics of battery recycling, a levy on imports of up to $0.03 per equivalent battery unit and an Equivalent Battery Unit to be set at 24 grams for handheld batteries under five kilograms. Transparency would be assured through a not-for-profit battery stewardship organisation with board oversight and annual benefits.

The briefing note explains that the ACCC process provides a tool for industry to fund the scheme and control free riders. Battery Stewardship Council members are currently in a consultation period, which will be followed by targeted public consultation and then ACCC application.

“One feature of the authorisation model which is important for industry to be aware of, is that the scheme itself remains voluntary in the sense that its operations are essentially self-regulated.

“It is only those activities considered anti-competitive that are ‘regulated’ by the ACCC,” it says.

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ACCC authorisation will provide an exemption from anti-competitive behaviour rules and allow competitors to set a levy or fee and use market levels to control so-called free riders.

The ACCC will then use the details of the scheme design to determine a public benefit from it which can be applied to a number of activities. These include collective bargaining, where two or more competitors negotiate terms and conditions with a customer or supplier, codes of conduct, industry levies which can be used to fund product stewardship arrangement and certain joint ventures or alliances. The latest briefing note says the proposed battery stewardship could potentially encompass all of the above.

Bingo sheds Sydney processing plant to ease ACCC concerns

Waste management company Bingo Industries has offered to sell its Banksmeadow processing plant to ease ACCC competition concerns regarding its $578 million purchase of Dial-a-Dump.

Read moreBingo sheds Sydney processing plant to ease ACCC concerns

ACCC to reauthorise levy raise for container recycling scheme

The ACCC has proposed to allow product stewardship organisation AgStewardship to increase its levy on the sale of agricultural and veterinary (agvet) chemicals by participating manufacturers.

Funds raised from the levy are used in the drumMUSTER and ChemClear programs to collect and recycle agvet chemical containers and safely dispose of agvet chemicals.

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AgStewardship intends to increase the levy from four cents per litre of kilogram to six cents, to keep pace with increased expenses and to fund improvements to its programs.

This is the first increase in the levy since it began in 1998 and the ACCC is proposing to reauthorise the collection of the levy at the higher level for a further five years.

Over the lifespan of the programs, drumMUSTER has diverted more than 32 million containers from landfill and ChemClear has resulted in more than 661,000 litres of agvet chemicals being collected for safe disposal and recycling.

ACCC Commissioner Roger Featherston said the programs mean collection and recycling services are provided at no further cost to purchasers of agriculture and veterinary chemicals included in the scheme.

“As a result, many more containers and chemicals are returned and safely disposed of, which reduces the negative environmental, health and safety consequences of improper disposal, leading to better outcomes for farms and the environment,” Mr Featherston said.

Currently 116 manufacturers of agvet chemicals participate in the scheme, which AgStewardship estimates covers more than 90 per cent of Australian agvet chemical manufacturers.

“This is an impressive level of coverage, but if more manufacturers can be encouraged to participate in the scheme, then it should achieve even greater environmental and other public benefits,” Mr Featherston said.

SA joint waste collection tender authorised by ACCC

The Australian Competition and Consumer Commission (ACCC) has authorised a group initiative of SA councils to jointly procure kerbside waste collection services.

The councils of Adelaide, Charles Sturt, Marion and Port Adelaide Enfield have been authorised to appoint a single provider for kerbside waste collection services.

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In the context of procuring waste services, councils may be considered to be each other’s competitors, which is why authorisation from the ACCC was required.

Broadly, the ACCC can grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any detriment.

Interim authorisation was granted on 20 July 2018, which allowed the councils to commence the tender processes. The tender closes on 12 December 2018 and will cover around 180,000 rateable properties.

According to the ACCC, it is common practice throughout Australia for local councils to jointly tender for waste services to reduce transaction costs, pool resources and expertise and achieve economies of scale. The ACCC has authorised 30 of these agreements so far, after concluding they were likely to benefit the public.

ACCC Commissioner Sarah Court said a joint tender process is likely to improve the four councils’ purchasing power and encourage more competition from suppliers than if each council conducted a separate tender process.

“It is common for groups of local councils to jointly procure waste services. The ACCC has authorised many such arrangements across Australia over the years,” she said.

“The joint tender process is likely to result in cost savings through encouraging more competitive bids, reducing transaction costs, and other efficiencies. These cost savings can be passed on to Adelaide residents in the form of lower costs or improved services,” Ms Court said.

The ACCC considered information both for and against the joint tender arrangement.

“Some suppliers raised concerns that the size of the proposed contract would deter some suppliers from tendering, resulting in a worse deal for ratepayers,” Ms Court said

“While there may be some companies that choose not to participate, the larger tender is also likely to attract additional bidders, and overall we consider most of the potential suppliers which would bid if the councils contracted separately are also likely to compete for the joint contract.”

“The councils have the experience and incentive to decide whether running a single tender process for a larger volume of work or four smaller, separate tenders, is likely to deliver the best outcomes for their respective communities.”

The ACCC also considered the longer-term impact of the joint tender on competition for waste collection services in Adelaide and found unsuccessful applicants will continue to have other opportunities to provide waste management services in other parts of the city.

ACCC will not oppose waste industry Toxfree acquisition

The ACCC has announced that it will not oppose the proposed acquisition of Tox Free Solutions Ltd (Tox Free) (ASX: TOX) by Cleanaway Waste Management Limited (Cleanaway) (ASX: CWY).

It comes after Cleanaway agreed to acquire Tox Free Solutions (Toxfree) for about $671 million at the end of last year.

“This was a complex matter for the ACCC. We consulted extensively with over 70 interested parties including customers, competitors, regulators and industry bodies. There was a mix of views on the competitive impacts, with some expecting little change, and others highlighting concerns,” ACCC Commissioner Roger Featherston said.

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The ACCC’s investigation focused on waste streams and regions where the parties’ operations overlap, and the competitive implications of Cleanaway’s overall growth and increased vertical integration. Some of the key areas of focus were:

  • Hazardous waste processing, particularly in NSW, Victoria, Queensland, SA and WA, and hazardous waste collection (including household hazardous waste collection)
  • Non-hazardous liquid waste processing, particularly in NSW/ACT and Queensland
  • Medical waste collection, particularly in Victoria, and medical waste processing,particularly in NSW, and
  • Used lubricating oil collection, particularly in WA.

“Although there may be a lessening of competition in some waste streams, such as hazardous waste collection and processing, and used lubricating oil collection, we considered that, in this case, the proposed acquisition is unlikely to meet the threshold of a substantial lessening of competition,” Mr Featherston said.

“We concluded that the threat of customers switching to competitors would constrain Cleanaway from increasing prices or decreasing service levels to a significant extent in any waste stream or geographic area.”

“Competitors include major global waste companies such as Veolia, Suez and Remondis, as well as smaller local and regional operators,” Mr Featherston said.

The ACCC has noted the growing consolidation in the waste industry and any future merger or acquisition involving any large suppliers of waste management services will be closely investigated.

“Increased vertical integration, particularly between waste collection and waste processing, was also an issue raised by industry participants. We considered, however, that the increased vertical integration arising from this transaction would be unlikely to substantially lessen competition because of competitive constraints imposed by alternative suppliers.”

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