The obligatory consortium Cobat on the one hand and the recycling companies together with their industry association on the other, have been heavily conditioning competition in the industry to the detriment of manufacturers who have had to bear high costs for scrap lead

The Italian Competition Authority, at its meeting on 29 April 2009, imposed a total of Euro 13,347,250 in fines over two anti-competitive arrangements in the lead battery recycling industry.

The Authority deemed that, in sepaaraate instances of conduct, Cobat (Consorzio obbligatorio batterie al piombo esauste e rifiuti piombosi, or Obligatory Consortium for Used Lead Batteries and Scrap Lead) on the one hand and the companies Eco-Bat, Piombifera Bresciana, Piomboleghe, Me.Ca. Lead Recycling, ESI-Ecological Scrap Industry and Ecolead, as well as the Associazione Imprese Riciclo Piombo da Batterie (AIRPB, or Battery Lead Recyclers Association), heavily conditioned the competitive dynamic in the national markets for the collection and recycling of used lead batteries.

The investigation was launched following complaints from lead-acid battery manufacturers and companies involved in collecting used batteries to export abroad.

The Authority found that, beginning in 2002, in the markets for collection and recycling of lead-acid batteries (such as car batteries) anti-competitive conduct took place that ended up increasing the cost of producing new lead batteries.

COBAT'S ARRANGEMENT

In the Antitrust Authority's view, the overall contractual provisions set by Cobat restricted competition by discouraging both the creation of collection systems separate from and parallel to that of COBAT itself and recycling activities independent of those administered by the Consortium, thus maintaining the status quo in the national recycling market. In this way, Cobat heavily conditioned competitive dynamics in the markets for collection and recycling of used lead batteries, making it less cost-effective to adopt the value-added subcontracting model which would have allowed manufacturers to pay for just the recycling service and so possibly reduce material costs for the production of new batteries.

The system as set up benefited collectors who, between 2004 and 2006, received an average price for the lead they collected of Euro 156.72 per tonne, as compared with 110.64 in the U.K. and 127.10 in Germany. By retaining exclusive control of the entire cycle of recovery of used batteries, Cobat has also accumulated over time balance sheet reserves (currently Euro 21.7 million) that have not led to a reduction in the environmental contribution payable by end customers for new lead batteries.

ARRANGEMENT AMONG RECYCLING COMPANIES

The Authority found that the companies that recycle lead batteries violated competition rules: the companies fined jointly decided on their respective market shares at the Consortium and hindered the acceptance of batteries for contract work, thus preventing manufacturers from taking advantage of a commercial practice for recycling used batteries that would have led to a reduction in the cost of producing new batteries.

The industry association AIRPB (Associazione Imprese Riciclo Piombo da Batterie, or Battery Lead Recyclers Association) took an active coordinating role and was used by the companies as the most appropriate location in which to reach common decisions.

The following are the fines decided on by the Authority:

- COBAT:                                Euro 4,400,000;

- Ecobat S.p.A.                                Euro 4,588,350;

- Ecolead S.r.l.                                Euro    545,000;

- ESI-Ecological Scrap Industry S.p.A.        Euro    903,500;

- ME.CA. Lead Recycling S.p.A.                Euro    994,500;

- Piombifera Bresciana S.p.A.                Euro 1,306,500;

- Piomboleghe S.r.l.                        Euro    608,400;

- AIRPB                                        Euro        1,000.