The Department of Justice today announced that Republic Services Inc. (Republic) will be required to divest waste collection and disposal assets in five states in order to complete the acquisition of Santek Waste Services LLC (Santek) . The department said without the divestiture, the proposed acquisition would significantly reduce competition for small-container commercial waste collection and municipal solid waste disposal services in six local markets in the Southeastern United States.

The department’s antitrust division, along with the Alabama attorney general, today filed a civil antitrust action in the U.S. District Court for the District of Columbia to block the proposed transaction. At the same time, the ministry filed a settlement proposal which, if approved by the court, would resolve the competitive prejudice alleged in the ministry’s complaint.

“The waste collection and disposal services provided by Republic and Santek are essential services for businesses, municipalities and cities,” said Acting Deputy Attorney General Richard A. Powers of the Antitrust Division of the Department of Justice. “Today’s settlement, which requires Republic and Santek to divest numerous facilities and assets in five states, will ensure that these customers continue to benefit from competition for these essential services.”

According to the complaint, Republic and Santek both provide commercial small-container waste collection services and municipal solid waste disposal services. In each of the local markets alleged in the complaint, Republic and Santek compete fiercely and are two of the few major suppliers of one or both of these essential services. The combination of the two companies would eliminate direct competition between them and threaten the lower prices and better service that customers have derived from this competition.

The complaint further alleges that in the Chattanooga, Tennessee and northern Georgia area, the proposed acquisition would limit the ability of collection competitors to compete with the combined company’s collection operations. The combination of these two vertically integrated companies which are both strong in collection and disposal in this market would give the merged company an increased incentive and ability to weaken its collection competitors by raising the price of l disposal, a key input for collection services. With limited alternative disposal options left in the market, collection competitors would have to incur higher disposal costs or go out of business, thereby reducing competition in the collection market.

Under the proposed settlement, Republic and Santek must hand over landfills, transfer stations, transportation locations, and waste collection routes in Alabama, Georgia, Tennessee, and Mississippi to Kinderhook Industries LLC (Kinderhook), or to another acquirer approved by the United States. Kinderhook, based in New York, New York, is a private investment company whose holding companies include Capital Waste Services LLC and EcoSouth Services of Mobile LLC, two providers of waste management services in the United States.

The proposed settlement also requires Republic and Santek to cede the waste collection lanes and associated assets in Texas to Waste Connections Inc. (WCN), or another acquirer approved by the United States. WCN, based in Ontario, Canada, is a provider of small container commercial waste collection and municipal solid waste disposal services in local markets in Canada and the United States.

Republic, a Delaware company headquartered in Phoenix, Arizona, generated total revenues of approximately $ 10.2 billion in 2020.

Santek, a Tennessee limited liability company headquartered in Cleveland, Tennessee, generated total revenues of approximately $ 140 million in 2019, the latest year for which information is publicly available.

As required by the Tunney Act, the proposed Consent Order, along with a Competition Impact Assessment, will be published in the Federal Register. Anyone may submit written comments regarding the proposed settlement during a 60-day comment period to Katrina Rouse, Chief of Defense, Industry and Aerospace, Antitrust Division, US Department of Justice, 450 Fifth Street NW, Suite 8700, Washington, DC 20530. At the end of the 60-day comment period, the United States District Court for the District of Columbia may render the final judgment, finding that it is in the public interest.