Veolia Environnement is the largest water service company in the world. From its headquarters in Paris, Veolia operates hundreds of subsidiaries under many names in dozens of countries. Despite its international presence, the core of its operations remains in France.
A Failed Corporate Strategy
Veolia’s corporate profits plummeted in 2008 and remained languid through 2010. In the water division, the company has suffered major losses from municipalizations and has struggled to obtain new long-term privatizations. Despite its disappointing performance, the company continued many of the same strategies in 2011 that it had used over the preceding five years:
- Seek long-term control of water services. It sought long-term, complex contracts to control entire municipal water and sewer systems. Such arrangements, however, seem to be increasingly rare for the company.
- Dodge competition. For Veolia, complex deals were appealing because they involved less competition. The company and several of its peers have come under the scrutiny of anti-trust regulators in the European Union.
- Target Europe and Asia. Veolia has focused half of its new growth investments in Europe, particularly Eastern Europe, where it has the financial backing of multilateral lending institutions. The company is also targeting China.
A Growing Movement for Public Water
Consumers worldwide report similar problems when Veolia runs their water and sewer systems. They say the company charges high rates, provides poor service and fails to make promised improvements. Many municipalities across France and the United States have taken back their water systems from Veolia to improve service and lower costs. Even its home city of Paris ended its privatization deal with the company and resumed public operation to save money for consumers. Elsewhere, the fight for public water continues. Communities from Germany to Morocco are seeking to remove Veolia and restore public control of their water resources.