Competition authorities: Waste management faces development challenges

Recommendations made in the report by the Nordic competition authorities on the waste sector include increased use of market solutions and clarification of the role of municipalities. Report prepared by the FCCA jointly with Regional State Administrative Agencies also highlights the need to ensure a fair competition framework for municipalities and private companies.    

In future, the waste sector must prepare to develop and introduce new uses for waste, while continuing to process waste for which recovery options have yet to be identified. Meeting this challenge requires coordination between industry actors and the development of legislation.

The report from the Nordic competition authorities recommends that, in order to ensure competitive neutrality between public and private producers, municipalities should keep their service provision and market-regulating tasks separate. Moreover, municipal waste undertakings should not participate in municipal decision-making. However, the expertise of municipalities and municipal undertakings will be needed in the development of the sector, and the report does not recommend their privatisation.

The Circular Economy Package adopted by the European Commission in December 2015 encourages the transition of businesses and consumers to the circular economy. The package aims to promote competitiveness, create jobs and foster sustainable growth. In the circular economy, products and materials are used more efficiently to ensure that both the raw materials and the value they create remain in circulation.

According to the report by the Nordic competition authorities, the development of the circular economy requires an increase in demand and supply for reusable materials and commodities. This requires properly functioning markets. Waste holders must be able to deliver waste to undertakings that offer innovative ways of utilising waste materials.

In relation to municipal waste management systems, producer responsibility must play a clear and equal role in competitive terms. The authorities must monitor and prevent the overly extensive exchange of information between operators within producer responsibility systems, which would represent a breach of the Competition Act.

The report also recommends that waste sector statistics and the definition of the concept of waste be prepared in an internationally uniform manner. In addition, to enhance efficiency, regulation of the waste sector should simplify the preconditions for cross-border trade in waste.

Together with the Regional State Administrative Agencies, the FCCA has investigated the operational and market conditions of waste management in Finland. These reports revealed problems with respect to the competitive neutrality of municipalities. However, no evidence or clear indications of violations of the Competition Act were discovered.

According to these reports, increasing use of waste for energy recovery has influenced the management of waste flows. This is hampering the development of the material recovery of waste.

In future, the FCCA will contribute to the creation of a circular economy and operations in the public and private sector, by playing a role in promoting the markets for and competition over waste management, and influencing legal reforms.

See the reports:

Report from the Nordic Competition Authorities: Competition in the Waste Management Sector – Preparing for a Circular Economy

FCCA Reports 2/2016 – KKV:n Selvityksiä 2/2016: Yhdyskuntajätehuollon selvitys (in Finnish)

Further information:
Research Director Martti Virtanen, tel. +358 29 505 3338
Senior Research Officer Lasse Pöyry, tel. +358 29 505 3374
Senior Research Officer Ari Luukinen, tel. +358 29 505 3144