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

The department’s Antitrust Division — along with the Alabama Attorney General — filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed transaction. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the department’s complaint.

“The waste collection and disposal services provided by Republic and Santek are essential services for businesses, municipalities, and towns,” said Acting Assistant Attorney General Richard A. Powers of the Justice Department’s Antitrust Division. “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 critical services.”

According to the complaint, Republic and Santek both provide small container commercial waste collection and municipal solid waste disposal services. In each of the local markets alleged in the complaint, Republic and Santek compete vigorously against each other and are two of only a few significant providers of one or both of these essential services. The combination of the two companies would eliminate head-to-head competition between them and threaten the lower prices and better service that customers have realized from that competition.

The complaint further alleges that, in the Chattanooga, Tennessee, and northern Georgia area, the proposed acquisition would limit the ability of collection rivals to compete with the merged company’s collection operations. The combination of these two vertically-integrated companies that 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 disposal, a key input for collection services. With limited alternative disposal options left in the market, collection rivals would have to incur higher disposal costs or cease their operations, thereby reducing competition in the collection market.

Under the terms of the proposed settlement, Republic and Santek must divest landfills, transfer stations, hauling locations, and waste collection routes in Alabama, Georgia, Tennessee, and Mississippi to Kinderhook Industries LLC (Kinderhook), or to an alternate acquirer approved by the United States. Kinderhook, based in New York, New York, is a private investment firm whose portfolio 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 that Republic and Santek divest waste collection routes and associated assets in Texas to Waste Connections Inc. (WCN), or to an alternate 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 corporation 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 last year for which information is publicly available.

As required by the Tunney Act, the proposed consent decree, along with a competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Katrina Rouse, Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street NW, Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the final judgment upon a finding that it serves the public interest.