Waste Management Services - OECD.org

1 Waste Management Services 2013 The OECD Competition Committee debated Waste Management Services in October 2013 . This document includes an executive summary of that debate and the documents from the meeting: a background note, written submissions by Canada, the Czech Republic, Estonia, the European Union, Finland, France, Germany, Ireland, Italy, Japan, Latvia, Lithuania, Norway, Peru, Poland, Romania, the Russian Federation, the Slovak Republic, South Africa, Sweden, Chinese Taipei, Turkey, Ukraine, the United Kingdom, the United States, BIAC as well as an aide-memoire of the discussion. Horizontal Agreements in the Environmental Context (2010) State Owned Enterprises and the Principle of Competitive Neutrality (2009) Competition in Local Services : Competition in Bidding Markets (2006) Solid Waste Management (1999) Technological and policy changes have altered the economics of Waste collection and treatment.

2 Landfills are further away from cities and larger. More Waste is diverted towards treatments that allow to re-use it, recycle it, or to recover energy from it. Secondary raw materials derived from recycled Waste are being increasingly sought afters, as primary raw materials are becoming scarcer and more expensive. Producers have been made responsible for the products they have put on the market at the post-consumer stage of the products life. All these changes are raising new competition issues, some relative to the conduct of firms operating in the markets for the Management of Waste , some raised by the ever-increasing amount of environmental legislation. This legislation is aimed at protecting the environment and the health of citizens, but may sometimes raise unnecessary barriers to competition and thus reduce the incentives towards efficiency.

3 This Roundtable examines recent developments in the Management of municipal solid Waste and discusses the experience of competition agencies in addressing the competition implications of these changes. Special attention is devoted to producer responsibility schemes, which have recently been introduced to full producers responsibility over the Waste they generate, and are already playing a major role in increasing the share of Waste that is being recycled but also raising a number of competition concerns. Unclassified DAF/COMP( 2013 )26 Organisation de Coop ration et de D veloppement conomiques Organisation for Economic Co-operation and Development 04-Apr-2014 _____ English, French DIRECTORATE FOR FINANCIAL AND ENTERPRISE AFFAIRS COMPETITION COMMITTEE Waste Management Services JT03355742 Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

4 DAF/COMP( 2013 )26 Unclassified English, French DAF/COMP( 2013 )26 2 FOREWORD This document comprises proceedings in the original languages of a Roundtable on Waste Management Services held by the Competition Committee (Working Party No. 2 on Competition and Regulation) in October 2013 . It is published under the responsibility of the Secretary General of the OECD to bring information on this topic to the attention of a wider audience. This compilation is one of a series of publications entitled "Competition Policy Roundtables". PR FACE Ce document rassemble la documentation dans la langue d'origine dans laquelle elle a t soumise, relative une table ronde sur les Services de gestion des d chets qui s'est tenue en octobre 2013 dans le cadre du Comit de la concurrence (Groupe de Travail N 2 sur la concurrence et la r glementation).

5 Il est publi sous la responsabilit du Secr taire g n ral de l'OCDE, afin de porter la connaissance d'un large public les l ments d'information qui ont t r unis cette occasion. Cette compilation fait partie de la s rie intitul e "Les tables rondes sur la politique de la concurrence". Visit our Internet Site -- Consultez notre site Internet DAF/COMP( 2013 )26 3 TABLE OF CONTENTS EXECUTIVE SUMMARY .. 5 BACKGROUND NOTE .. 9 CONTRIBUTIONS FROM DELEGATIONS Canada .. 43 Czech Republic .. 59 Estonia .. 67 European Union .. 71 75 France (Version fran aise) .. 77 France (English version) .. 91 Germany .. 103 Ireland .. 109 Italy .. 123 Japan .. 131 143 Lithuania .. 147 Norway .. 153 Peru .. 165 Poland .. 171 Romania .. 177 Russian federation .. 181 Slovak Republic.

6 191 South Africa .. 197 Sweden .. 201 Chinese Taipei .. 209 Turkey .. 215 Ukraine .. 219 United Kingdom .. 229 United States .. 233 BIAC .. 237 SUMMARY OF DISCUSSION .. 243 ** SYNTH SE .. 253 NOTE DE R F RENCE .. 259 COMPTE RENDU DE LA DISCUSSION .. 299 DAF/COMP( 2013 )26 4 DAF/COMP( 2013 )26 5 EXECUTIVE SUMMARY By the Secretariat * Considering the discussion at the roundtable, the delegates submissions, as well as the panellist s presentation, several points emerge: (1) Environmental objectives, taxonomy, and historical practices govern much of the law and regulation that applies to the Waste sector, including the Management of municipal solid Waste ( MSW ). Although these regulations constrain the conduct of the firms operating in this sector, competition can nevertheless be relied upon to provide incentives for efficiency.

7 Competition authorities advocacy can help to ensure that laws and regulations achieve environmental goals in a least-anticompetitive way. Responsibility for the Management of MSW is allocated among the municipality, the households and, where extended producer responsibility ( EPR ) has been adopted for packaging Waste , the producers, the importers and the retailers of the content of the packaging. EPR has given incentives to develop systems to collect or take-back the specified types of Waste in order to reuse it or recycle it. Environmental preferences are often expressed as a Waste hierarchy: The hierarchy states that not generating Waste is most preferred, followed in order of decreasing preference by reuse, recycling, incineration for energy, and disposal. The Waste Management sector is strictly regulated to achieve specific environmental objectives.

8 These rules may have anticompetitive effects, and a recurring theme in the country submissions is the need for competition advocacy to ensure that this legislation is designed so as to allow for effective competition, which can help to achieve these environmental objectives at a lower cost. The experience of competition law enforcement does not support any special treatment for the Waste Management sector. Several decisions have managed to balance the environmental and competition objectives. As in other areas where competition and regulation interface, the question is whether the competition restriction, , the anticompetitive exclusivity agreement, is really necessary to the achievement of the environmental objective or whether this can be achieved in manner less harmful to competition.

9 (2) Collection of MSW is a natural monopoly under many, though not all, circumstances. Several empirical studies indicate that costs increase when more than one collector is used. Nevertheless, there are countries where there is competition in the market. Collection usually exhibits significant economies of population density and, therefore, is usually considered to be a local natural monopoly. This was also a finding of the 1999 OECD roundtable discussion on Waste management1. Several empirical studies indicate that costs increase when * This Executive Summary does not necessarily represent the consensus view of the Competition Committee. It does, however, encapsulate key points from the discussion at the roundtable, the delegates written submissions, the panellist s paper and the Secretariat s background paper.

10 1 See DAF/COMP( 2013 )26 6 more than one collector is used. Consequently, municipalities usually arrange for MSW to be collected from households by a provider that is granted the monopoly for this service, either the municipality itself (directly or as a municipal company) or a private company. The collection of Waste that requires special handling or Waste produced in large quantities does not enjoy significant economies of density; hence it can be done by competing providers. In Sweden, for example, collection of recyclable fractions of MSW from multi-family apartment buildings is subject to competition among private firms, but collection from individual households is performed by the municipality. Competition in the market for the collection of MSW from individual households is, or was, the norm in a handful of the jurisdictions studied.