Mergers: Commission clears Derichebourg's acquisition of Groupe Ecore, subject to conditions

The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of Groupe Ecore by Derichebourg. The approval is conditional on full compliance with a commitments package offered by Derichebourg.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Derichebourg is the leading metal scrap recycler in France and directly competes with Group Ecore on the collection and recycling of metal scrap in several regions in France. Together, they would have had a strong position in these markets and the acquisition would have eliminated an important alternative for customers and suppliers. We approved the acquisition of Group Ecore thanks to comprehensive divestments that will ensure that competition remains vibrant in the French recycling market”.

Derichebourg, a subsidiary of the Groupe Derichebourg, is active in the environmental services sector, such as waste collection and recovery and business services like cleaning services. Groupe Ecore operates in the waste management sector, from the collection to the marketing of end-of-life materials. It is mainly involved in the recycling of metal scrap.

The Commission's investigation

The Commission had concerns that the transaction, as initially notified, would have raised serious competition concerns. In particular, the Commission's investigation found that the transaction would lead to significant horizontal overlaps between the activities of the companies in the following markets:

• the collection and recycling of metal scrap, including end-of-life vehicles, in several local markets in France;
• the recycling of electrical and electronic equipment scrap in several local markets in France; and
• the commercialisation of shredded ferrous scrap (or ‘E40') in several local markets covering France and neighbouring countries.

The Commission found that the merged entity would have a strong market position and would face limited constraints from competitors in those markets.

The proposed remedies

To address the Commission's competition concerns, Derichebourg offered to:

• divest four recycling plants in France incorporating a shredder and four collection sites;
• offer, at the option of the purchaser, up to five additional collection sites in France located in the same catchment area of the recycling plants divested, which will contribute to the supply of metal scrap to the shredders;
• offer transitional service agreements, including access to all assets and services required to operate the divested business competitively (such as IT services, transport services, or quality, safety and environmental services) for a duration enabling the divested business to become fully independent from Derichebourg.

The final commitments, following significant improvements based on the feedback received by market participants, fully address the competition concerns identified by the Commission.

The Commission therefore concluded that the proposed transaction, as modified by the commitments, no longer raises competition concerns. The Commission's decision is conditional upon full compliance with the commitments.

Companies and products

Group Ecore, based in France, is active in the waste management sector. Its activities cover the entire recycling chain, namely the collection, recovery and marketing of end-of-life materials. Its core business is the recycling of metals. It is also involved in the recycling of paper and plastic waste.

Derichebourg, based in France, is part of the Derichebourg Group, which is present in the environmental services sector (collection and recovery of metal scrap, services to local authorities such as household waste collection) and business services (cleaning services, temporary employment, outsourced aeronautical services, energy, etc.). With regard to metal scrap in particular, an activity that constitutes its core business, Derichebourg Environnement covers the entire recycling chain, ensuring the collection, recovery and marketing of ferrous (steel) and non-ferrous (aluminium, copper, etc.) waste.

Merger control rules and procedures

The transaction was notified to the Commission on 26 October 2021.

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). If commitments are proposed in Phase I, the Commission has 10 additional working days, bringing the total duration of a Phase I case to 35 working days, such as in this case.

More information will be available on the Commission's competition website, in the public case register under the case number M.10249.