The Competition Authority today publishes an opinion addressed to the municipalities in the capital region and South Iceland and the Ministry of the Environmentand Natural Resources Minister, in which these authorities are urged to promote increased competition in the market for the treatment of recyclable waste, particularly paper and cardboard.
The opinion, among other things, concludes that the municipalities' introduction of the collection of paper and cardboard from households in so-called 'Blue Bins' has led to a distortion of competition. The municipalities in question, other than the City of Reykjavík, have arranged matters so that their residents are now required to purchase a service for the collection of paper and cardboard from the municipalities themselves, in the form of the Blue Bin. The services of private companies, which initially pioneered the service in question and thereby established competition in this field, have been pushed aside in the aforementioned municipalities. In Reykjavík, private companies' services have been restricted and competition curtailed.
Furthermore, it is the opinion of the Competition Authority that the provisions of Act no. 53/2003 on waste management run counter to the objectives of competition law and make competition in trade more difficult by allowing municipalities to maintain the aforementioned arrangement without regard to competition considerations. As a result, the residents of the municipalities miss out on the cost savings and development that competition in the relevant field would otherwise bring.
It is also pointed out that the competitive position of private companies in this field is distorted, as municipalities and their joint bodies are, among other things, exempt from income tax, and the City of Reykjavík does not charge value-added tax for the services provided by Blátunnan.
In the opinion of the Competition Authority, it is important to ensure that residents of municipalities are able to enjoy the efficiencies and innovation that effective competition brings to the sector in question. The Competition Authority is of the opinion that significant efficiencies can be achieved, with the same or better results in reuse and recycling, by introducing competition. Studies have shown that tendering the service or free competition leads to prices for general waste collection that are up to 10-33.5% lower.
Based on the foregoing, the relevant local authorities and other public bodies are instructed to implement a revised structure for the said projects, in order to prevent market barriers and facilitate entry for new competitors.
This opinion is prompted by previous cases handled by the Competition Authority concerning waste management, feedback from local council residents, and a complaint from Gámþjónustan hf. to the Competition Authority dated 1 March 2013.
The municipalities concerned are the owners of the waste management companies SORPU bs. and Sorpstöð Suðurlands bs. The complaints regarding the Blue Bin concern, on the one hand, the requirement of the municipalities that residents, in municipalities other than Reykjavík, purchase the said service from the municipalities themselves and that recyclable materials, e.g. paper and cardboard, are handed over to SORPU, via the Sorpstöð Suðurlands, as appropriate. Residents of these municipalities are therefore required to pay for this service.i.e. paper and cardboard, is delivered to SORPU, via the Southlands Waste Station where applicable. Residents of these municipalities are therefore required to pay for the Blue Bin service, whether or not they choose to use it. However, there are complaints about the City of Reykjavík's implementation of the promotion of the options available to the city's residents, e.g. purchasing the Blue Bin, returning paper and cardboard to a local container, or arranging with a private company to hire recycling bins.e. to buy the Blue Bin, return paper and cardboard to a local bin, or contract a private company to hire recycling bins and collect paper and cardboard.
In the aforementioned complaint by Gámaþjónustan, it was requested that the Competition Authority exercise its binding intervention in the matter on the basis of section 16(1)(b) of the Competition Act no. 44/2005, due to the conduct of the municipalities. In light of the provisions of the Waste Act No. 55/2003, which stipulate, inter alia, that the local council shall be responsible for the transport of household waste, the Competition Authority does not consider it possible to intervene in the matter in a binding manner. For these reasons, the case is concluded with an opinion and recommendations.
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