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From Antitrust Law Daily, March 13, 2015

Waste Management gets U.S. approval to acquire Deffenbaugh Disposal

By Jeffrey May, J.D.

Waste Management Inc. (WMI) can proceed with its proposed acquisition of Deffenbaugh Disposal Inc. (DDI), subject to the divestiture of small container commercial waste service routes in the Topeka, Kansas, area and in two areas of Northwestern Arkansas, the Department of Justice Antitrust Division announced today. The divestitures are intended to resolve the government's concerns over the competitive impact that the transaction could have on these markets if the deal were permitted to proceed without modification (U.S. v. Waste Management Inc., Case 1:15-cv-00366).

The Justice Department filed a complaint in the federal district court in Washington, D.C. to block the proposed transaction. At the same time, it filed a proposed consent decree that, if approved by the court, would resolve the competitive concerns alleged in the complaint.

WMI’s acquisition of DDI would significantly reduce competition in three local markets for small container commercial waste service markets—the collection of municipal solid waste from commercial businesses and retail establishments, the government alleged. In addition to the Topeka market, the government identified two Arkansas markets: Van Buren/Fort Smith and Springdale. In Topeka and Van Buren/Fort Smith, the combination of WMI and DDI would have reduced the number of significant competitors in the collection of small container commercial waste from three to two, and four major providers would have been reduced to three in the Springdale area. Moreover, in both Arkansas markets, DDI was identified as the low-price leader. Thus, the government was concerned that the combination would result in higher prices for customers.

Under the terms of the proposed consent decree, WMI must divest DDI’s small container commercial waste routes in each of these three markets. The consent decree requires the approval of the federal district court.

The parties announced the definitive merger agreement last October. The transaction is valued at approximately $405 million.

Attorneys: Ian D. Hoffman for Department of Justice Antitrust Division. Brian McCalmon (K&L Gates LLP) for Waste Management Inc. Vadim Brusser (Weil, Gotshal & Manges LLP) for Deffenbaugh Disposal Inc.

Companies: Deffenbaugh Disposal Inc.; Waste Management Inc.

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