RECYCLABLE PACKAGING WASTE: ANTITRUST AUTHORITY CALLS FOR MORE COMPETITION TO REDUCE PUBLIC EXPENDITURE, PROTECT THE ENVIRONMENT AND SUPPORT THE RECYCLING INDUSTRY

In the nearly 100 pages of its document, the Authority analyses an industry that has been subject to continual regulatory changes and in many areas of the country, especially in the south, to emergency-style management: these two factors have hindered a proper organization of the recovery of materials whose original value was Euro 25 billion; and they have had a negative impact on the level of competition in the industry.

In order to overcome a situation that leads to increased costs for users, the Authority proposes a series of corrective measures:

1) Direct negotiation between local councils and recycling companies

The Authority, in view of the imminent expiry of the Convention that governs relations between ANCI, the Associazione Nazionale Comuni Italiani (National Association of Italian Municipalities) and CONAI, the Consorzio Nazionale Imballaggi (National Packaging Consortium) regarding the collection of recyclable materials, points out that much of the waste covered by the Convention, in particular glass and paper, has economic value. So local councils, maintaining subsidiarity with respect to CONAI’s role, should be enabled to negotiate directly regarding the sale of recyclable materials with the businesses that operate in that sector. That could be done by retaining ownership of recyclable waste that at present, instead, at least in most cases, passes to the Consortia in the CONAI system. In this way, local councils could receive income to be used in the financing of garbage collection and if possible in reducing charges on residents for the collection of solid urban refuse.

2) Reduction of the areas ‘reserved’ to the Consortia

The study found that many local councils, by way of a practice known as ‘assimilation’, have indirectly contributed to the extension of the activities of the system of consortia – whose aim the law stipulates as support for collection of rubbish deposited by citizens for public collection – to special waste produced by the trades and commercial businesses. This choice further reduces the degree of competition in the industry, siphoning off from the market a proportion of materials that should instead be left to a direct relationship between those who produce the waste and the disposal companies.

3) Transparent contracting of services

The Antitrust Authority points out that local councils, applying a distorted version of the so-called in-house method or public-private partnerships, directly contract out rubbish collection and disposal services to former municipal companies that are part-owned by the councils themselves.

In some areas of the country that are subject to emergency administration, it happens that former municipal companies have taken over, without any bidding process, the management of waste-recovery plants built with public money, thus entering into competition with private market operators.

4) Review of the consortia system

The so-called CONAI system, the Consortium of packaging waste producers which in turn is made up of the various specific materials consortia (glass, paper, aluminium, steel, wood, plastic), represented an effective response to the initial organizational requirements of numerous industries faced with the “polluter pays” principle espoused in EU law. More than a decade later, however, the organizational arrangements and the consortia’s activities need to be reviewed in order to comply more fully with the principles of transparency and encouragement of competition. For instance, the management bodies of the consortia should include representatives not only of manufacturers and users of packaging but also of recovery/recycling companies and rubbish collectors, as well as recognizing a more active role for consumer representatives.

5) Review of the system of CONAI environmental charges

The CONAI environmental charge paid by manufacturers of packaging materials is fixed by CONAI at a national level for each category of recyclable material and is the main source of financing for local government. The system of charge-setting should be made more transparent by involving third-party institutions to ensure its better functioning. It is also necessary to set up a system to enhance the efficiency of the various consortia based on the real quantities and quality of packaging waste recovered or recycled, specifically splitting the data between the collection results directly achieved by the consortia and those achieved instead by companies in the recycling industry.

6) Opening up of waste category consortia to competition

Because of recent changes made by Legislative Decree no. 4/2008 to the unified environmental text, the option originally extended to packaging manufacturers of setting up consortia as alternatives to those of the CONAI system for fulfilling their recovery obligations has been abolished. The Antitrust Authority consequently points out the need to restructure the industry in conformity with competitive principles so as to improve performance in terms of collection and best use of materials.

7) Use of auctions for assigning collected materials

The Antitrust Authority points out a number of critical factors in relations between the waste category consortia and the companies that recover and recycle collected materials for new production. Some consortia, in particular those for paper and glass, have been accused by the companies of using non-transparent methods for assigning materials.

As a competitive alternative to the present methods, the Authority draws attention to the solution adopted by the plastics consortium, using auctions to assign the packaging materials for which it is responsible. In this way, so long as the auctions are organized efficiently and without prejudice to the purchasing policies of the companies involved, it would be possible to eliminate the lack of transparency found in the assignments and the negative effects conditioning the availability of manufacturing inputs, as well as allowing more efficient use of secondary raw materials.

Rome, 14 August 2008