German FCO: inquiry results show decreasing competition in collection and transport of household waste

On 22 December 2021, the German Federal Cartel Office (FCO) published its 143-page report on the sector inquiry into the collection of household waste. In its findings, the FCO made a criticism that "competition in the collection and transport of waste has decreased in all sectors in recent years".

Scope of sector inquiry

The sector inquiry concerned the collection and transport of packaging waste from:

• private households (used glass and light packaging); and

• municipal household waste, in particular residual and organic waste, paper bins and bulky waste

Key findings of FCO

The FCO analysed the development of the markets from 2006 to 2018.

For packaging take-back in the dual system (used glass and lightweight packaging), the results were as follows:

• Some of the markets for the collection and transport of packaging waste and used glass are highly concentrated regionally.

• Prices for the collection of packaging waste were initially at a roughly constant level, but from 2012 onwards prices have risen by approximately a quarter in inflation-adjusted terms up to 2018.

• A few larger waste management companies have a strong and consolidated market position in packaging take-back organised by dual systems.

• In the case of tenders, the total number of companies bidding and the average number of bidders per tender are declining.

• A change of contractor after tenders is now rare.

For the collection and transport of municipal household waste, the results were as follows:

• Competition is restricted from the outset by the fact that only about half of the services are put out to public tender at all.

• The other half of the services are provided by the municipalities and districts themselves or within the framework of various forms of municipal cooperation.

• Competition intensity is declining in tenders for the collection and transport of household waste.

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Background to sector inquiries

Within the framework of sector inquiries, the FCO analyses the structures and competitive conditions in certain economic sectors. The investigations are not directed against individual companies and do not pursue any specific suspicion of a cartel violation. Rather, the FCO is interested in gaining comprehensive knowledge about the markets under investigation. This knowledge can then form an important data basis for further FCO proceedings.
 

Practical advice

It remains to be seen what steps the FCO considers necessary on the basis of the results found. In any case, the results explicitly refer to the new provision in German competition law by which the FCO can oblige companies to notify mergers in certain economic sectors for merger control even below the normally applicable turnover thresholds. According to the new provision in section 39(a) of the Act against Restraints of Competition, a sector inquiry is required beforehand. The FCO has now complied with this requirement, so further action can be expected here. For example, the FCO might oblige specific companies to notify about the acquisition of smaller companies with turnovers of only €2 million or more.

For further information on this topic please contact Sascha Dethof (sascha.dethof@fieldfisher.com).