Bundeskartellamt prohibits administrative district from calling for boycott and exerting illegal pressure (paper disposal)

The Bundeskartellamt has prohibited the administrative district of Neu-Ulm from calling upon the local paper waste disposal company to boycott "Der Grüne Punkt – Duales System Deutschland AG" (DSD, "The Green Dot – Dual System") and exerting pressure on the DSD inducing it to violate the ban on cartels. The administrative district of Neu-Ulm had requested the local waste disposal company and DSD to refrain from entering into individual service agreements for the disposal of paper, cardboard and cardboard packaging ("Papier, Pappe und Kartonagen", PPK). The decision (available on the internet at http://www.bundeskartellamt.de) was declared to be immediately enforceable.

The prohibition needs to be seen against the background of a long-standing debate with the local authorities' associations ("Kommunale Spitzenverbände") on how the disposal of so-called PPK-waste can be brought into line with competition law. The main issue of the debate is how to take into account the interest of all parties involved (i.e. the municipal authorities in their role as public waste management authority, the dual systems under Article 6 (3) of the German Packaging Ordinance (VerpackV), the local waste disposal companies and the citizens) in a uniform waste management of PPK products, and how to maintain at the same time demand competition between public waste management authorities, DSD and other dual systems entering the market (such as Landbell AG, ISD Interseroh GmbH).

The municipal waste management authorities are responsible for the disposal of PPK-waste from private households within their area of responsibility. However, whenever used sales packaging is concerned, this is subject to the so-called producer responsibility (which includes taking back and recycling or disposing of sales packaging waste). Usually, manufacturers and distributors of sales packaging participate in so-called dual systems to fulfil their obligations established by the German packaging law. The dual systems operate a comprehensive system for household-oriented collection of such packaging. They engage waste disposal companies to collect and recycle sales packaging.                      

Numerous municipal waste management authorities reject direct contractual agreements between dual systems and local waste disposal companies on the collection and recycling of used PPK-sales packaging. They are of the opinion that dual systems should either voluntarily adhere to agreements they have reached with the respective local waste disposal company or be obliged under administrative law (Article 6 (3) sentence 8 VerpackV) to accept co-utilisation and proportional cost absorption for the PPK collection systems.

However, in the Bundeskartellamt's view cost-efficient and inexpensive waste management in favour of the consumers requires that each dual system intending to engage waste management services provided by the local disposal company negotiates individual disposal prices corresponding to its proportional share. Only in this way demand competition can be maintained and the dual systems can fulfil their obligations under the Packaging Ordinance to purchase the services they require under competitive conditions. The possibility to employ waste management services at reasonable prices is of particular relevance for new suppliers entering the market. In contrast, the public waste management authorities' position leads to a pooling of demand for waste management services for PPK products which is incompatible with Article 1 of the ARC. Moreover, it contradicts the explicit objective of the Act for Promoting Closed Substance Cycle Waste Management and Ensuring Environmentally Compatible Waste Disposal ("Kreislaufwirtschafts- und Abfallgsetz") to prevent a re-municipalisation of the whole paper sector.

Against this background the Bundeskartellamt's prohibition decision against the administrative district of Neu-Ulm is of general significance.