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OFT accepts divestment of medical waste plant in SRCL/Cliniserve merger

37/09    2 April 2009

The OFT has accepted a divestment package from SRCL and Cliniserve Limited to address competition concerns arising from SRCL's acquisition of Cliniserve.

SRCL is a subsidiary of the US based company Stericycle Inc, and provides waste management services to medical and other sectors throughout England and Wales. Cliniserve provides the same service, mainly for the healthcare and pharmaceutical sectors.

Cliniserve has agreed to sell its medical waste treatment plant in Littlehampton to Ethos Recycling Limited. The divestment package includes an agreement, approved by the OFT, in which SRCL will continue to provide waste for disposal at the newly-acquired Littlehampton site for a specified period of time while Ethos establishes its new business.

The OFT consulted publicly on the proposed undertakings, as well as on the suitability of Ethos as a purchaser of the Littlehampton facility.

Dr Amelia Fletcher, OFT Senior Director of Mergers, said: 'This divestment package will help to ensure the ongoing competitiveness of medical waste treatment services in the south east of England. The Littlehampton facility represents an important source of existing and potential new capacity in a market currently suffering capacity shortages. Its sale will ensure that the plant continues to play a role in ensuring hospitals and other healthcare specialists are able to obtain competitive prices and quality service.'

As a result of this agreement, the merger will not be referred to the Competition Commission.

NOTES

1. The full text of the decision, along with a copy of the undertakings will be available in the mergers section.

2. The Reference Test - the OFT has a duty to make a reference to the Competition Commission if the OFT believes that it is or may be the case that arrangements are in progress or in contemplation which if carried into effect will result in the creation of a relevant merger situation; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

3. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million, or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

4. Undertakings in lieu of reference - under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference to the Competition Commission, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate.

5. Upfront buyer - the OFT considered in this case that a necessary requirement to suspend the duty to refer and consider undertakings in lieu was that the divesture of Cliniserve's Littlehampton facility should be to a suitable purchaser approved by the OFT before it accepted the undertakings and relinquished its duty to refer. This meant that the OFT was able to consult publicly on the suitability of Ethos as the proposed purchaser, as well as any other aspects of the draft undertakings, during the public consultation period.

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