AG Announces Agreement On Waste Company Merger

December 8, 2008

Texas Attorney General Greg Abbott, seven state attorneys general and the U.S. Department of Justice have reached an agreement designed to ensure the merger of Allied Waste Industries, Inc. and Republic Services, Inc. does not reduce competition in three Texas markets.

 

Under Friday’s agreed final judgment, the combined company will divest, or sell off, certain waste-hauling routes and landfills in Fort Worth, Houston and Lubbock.

 

An investigation begun last June by the Office of the Attorney General concluded that the proposed merger would reduce competition and therefore likely result in higher prices or lower quality service in all three cities.

 

Separate from the multi-state agreement, the AG’s office also reached an agreement with the combined company that will help ensure competitiveness in the Dallas market.

 

“Texas must continue fostering its vibrant, competitive, free-market economy,” Attorney General Greg Abbott said. “To protect competition within the waste management sector, the Office of the Attorney General conducted a thorough investigation into the proposed merger of two industry giants. Today’s agreement requires that the newly-combined company divest crucial assets to ensure that competition continues to thrive in the Fort Worth, Houston and Lubbock markets.”

 

The other states that joined in the settlement were California, Indiana, Kentucky, Michigan, North Carolina, Ohio and Pennsylvania.

 

Three waste management companies – Allied, Republic, and Waste Management – dominate several Texas markets. The three companies control more than 80 percent of the commercial hauling routes and all of the landfills in Houston.

 

Private waste management companies depend upon privately owned landfills for waste disposal sites. Without competition among the landfills, companies could face higher prices or be forced to drive long distances to dump their customers’ waste.

 

Under Friday’s agreement, Allied and Republic must sell three waste disposal assets and 32 hauling routes in Houston. The combined company must also divest five routes in Fort Worth, where it must also sell off one of its landfills.

 

After the waste management giants’ proposed merger was announced, the OAG’s Antitrust Division began investigating the deal’s impact on Texas markets. In Lubbock, the city’s only landfill is owned and operated by the City of Lubbock. However, because Allied and Republic currently control more than 60 percent of the commercial hauling routes in Lubbock County, the OAG expressed concerns about trash collection routes.

 

As a result, the combined company agreed to divest seven commercial hauling routes in the county.

 

To help ensure competition among landfill operators in Dallas, the combined company also agreed to allow the state to challenge any future attempts by the company to privatize the municipal McCommas Bluff landfill, which currently serves as a vital source of independent competition in that market.

InstantNewsWestu Staff

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