Following the adoption of the Green Deal, the interlink between competition law enforcement and environment protection is more visible not only at EU level, but also at a national level.
Out of the three proceedings for abuse of dominance opened by the Italian Competition Authority (“ICA”) so far in 2021, two deal with environment protection, and relate, more specifically, to the waste-recycling sector. The first proceeding relates to waste-management of electrics and electronics, while the second one concerns the waste-management of goods made in polyethylene.
Both markets are characterised by the presence of two incumbent operators holding a dominant position: Erion and Polieco, respectively.
In the first investigation, Erion is accused of abusing its dominant position through a complex abusive strategy, consisting of three main types of conduct:
The three described behaviours are aimed, in the ICA’s view, at excluding competitors from the market by both retaining electronics producers already subscribed to Erion and gaining new ones by offering conditions that cannot be replicated by other waste-management systems already present in the market and ultimately impede the access to the market of new waste-management systems.
In the second investigation, the subject under scrutiny is Polieco, a consortium made up of producers/importers/distributors of goods made in polyethylene. Polieco represents the historical incumbent in the market, having been the only mandatory consortium under the relevant Italian environment legislation since 1997. However, recent regulatory interventions have opened-up the possibility for new consortia to operate in the market, subject to obtaining a Ministry authorisation. Following these changes in the law, Ecopolietilene, a newly constituted consortium, obtained the requested authorisation in June 2020 and started to operate in the market dominated by Polieco.
Faced with a potential competitor, Polieco, according to the ICA, started to put in place an abusive strategy aimed at reducing the number of Ecopolietilene potential clients and at increasing the market-entry costs to be sustained by the new consortia. In particular, in the Authority’s view, Polieco:
The ICA’s intervention occurs at a crucial moment for the liberalisation of the environmental compliance services in the attempt to overcome the monopolistic structure of the waste-management market, traditionally characterised by the presence of a single economic operator.
The alleged abusive conduct, put in place by the two operators under investigation, risk both a reduction in the competitiveness in the market and negative impacts on the environment, in terms of a reduction in the number of goods recycled and of worse quality levels offered to final consumers in terms of environmental compliance services.
In particular, in the polyethylene case, an indirect effect of reducing competition in the market by means of exclusionary behaviours may be, according to the ICA, to increase the levels of the environment contributions paid by the producers of the goods to be recycled that risk to turn into an increase of the prices of the goods themselves, ultimately harming the final consumers.
In the electronics market, the abusive strategy allegedly put in place by Erion may similarly generate downsides in terms of environment protection. By artificially imposing lower environmental contributions on its subscribers, Erion may discourage competitors to invest and search for efficiency-gains, since they will not be able to transfer them on electronics producers. This will thus undermine the overarching goal of rendering the waste-management process as much sustainable as possible.
The ICA has now until autumn 2022 to end these two investigations. The launching of these investigations suggests that National Competition Authorities are increasingly focusing on the challenges posed by climate change and on exploring how competition law can help tackling them.
For further information, please contact Federico Marini Balestra.