The Bundeskartellamt has today published the report on its sector inquiry into the collection of domestic waste.

The sector inquiry dealt with the collection and transport (1.) of packaging waste from private households (waste glass and lightweight packaging material) and (2.) of municipal waste, especially residual waste, organic waste, used paper and bulky waste. The inquiry closely analysed the markets’ development from 2006 to 2018.

Andreas Mundt, President of the Bundeskartellamt: “The overall result of the inquiry is that competition in the collection and transport of domestic waste has decreased in all areas over the past years. For consumers this means: It can become expensive.”

The Bundeskartellamt has dealt with the increasing level of concentration in the entire sector for several years. Mergers in this sector are assessed critically. The acquisition of the packaging waste compliance scheme DSD – Duales System Holding GmbH & Co. KG by REMONDIS SE & Co. KG was prohibited in 2019. However, many acquisitions of smaller waste management companies are currently not yet subject to merger control by the Bundeskartellamt since the target companies often do not reach the statutory minimum turnover thresholds required for merger control by the authority.

Andreas Mundt: “The waste management markets are of great economic importance. Effective competition guarantees more efficient production, better prices, improved quality and more innovative drive. The increasing costs of waste management ultimately have to be borne by consumers in the form of higher product prices or waste disposal fees. As far as legally possible, we will therefore keep a close eye on developments in the market and, where necessary, take action.”

(1.) The packaging waste compliance scheme (waste glass and lightweight packaging material)

When it comes to the collection and transport of packaging waste and waste glass, some of the markets exhibit strong regional concentration. The prices for the collection of packaging waste were relatively stable between 2006 and 2011; the prices for the collection of glass were in some cases even below the prices charged in 2006. From 2012 to 2018 the inflation-adjusted prices increased by about a quarter.

In the packaging waste compliance scheme, there are a few larger waste management companies which hold a strong and stable market position. The Rethmann Group to which Remondis belongs is by far the leading company in Germany, followed by Alba, Veolia and some medium-sized companies (information from 2019).

When it comes to tender procedures, the total number of companies submitting a bid and the average number of bidders per tender procedure decreased from 4-5 bidders in 2006 to 2-3 bidders in 2018. It has become rare to change contractor after carrying out tender procedures. In the first half of the period under examination, between 40% and 70% of the tender procedures resulted in new contractors; since 2012 this has dropped to between 20% and 40%.

(2.) Collection and transport of municipal waste

In the collection of municipal waste, competition is first of all limited from the outset due to the fact that merely around half of the services are publicly tendered in the first place. The other half of the services are provided by the municipalities and districts themselves or in the context of various forms of municipal cooperation, resulting in the fact that these services are not exposed to competition. This means that the services are not publicly tendered in the first place. However, tender procedures generally have a dampening effect on prices since the most economically advantageous tender is accepted. This is not the case when no tender procedures are conducted.

Unfortunately, it can be stated that the intensity of competition is also in decline with regard to tender procedures for the collection and transport of municipal waste. In 2006 more than three bids were submitted by waste management companies in almost 70% of tender procedures; in 2018 the share of tender procedures in which more than 3 bids were submitted decreased to 30%.

Since the 10th amendment to the German Competition Act (GWB) entered into force, the Bundeskartellamt can oblige companies to notify mergers in specific sectors of the economy even if they do not reach the turnover thresholds normally applicable. This requires, among other things, that a sector inquiry into the relevant sector has been carried out (Section 39a GWB). Against this backdrop, it will be clarified in a separate examination whether individual companies can be obliged to notify planned mergers