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The public ruling of Dansk Retursystem is violating competition

17. december 2003

Journal nr. 3/1120-0203-0010/VAR/FI The Competition Council to the Minister of Environment: The public ruling of Dansk Retursystem is violating competition

The Competition Council issues a statement according to Section 2 (5) in the Danish Competition Act to the Minister of Environment

The Competition Council decided on its meeting the 17 December 2003 to issue a statement to the Minister of Environment. In the statement the council pointed out that the public ruling of the Dansk Retursytem (DRS) had led to several competition problems in the Danish beer and soft drinks market. The Minister of Environment has given DRS the sole right for six years to the return and deposit system for packaging of beer and soft drinks.

The Danish Competition Agency had received several complaints from small importers and producers who found the system bureaucratic and inflexible. It further made them insecure that the system is owned and run by their competitors (Carlsberg, The Brewery Group (Bryggerigruppen) et al.)

The Competition Council had previously looked into the company and the regulation when it was planned by the Danish Environmental Protection Agency. The company has now been in function for a couple of years and the Council considered it was to evaluate on the critics it had raised before and during the creation of the system

The Council pinpointed five reasons to why they had to issue a statement. They were

  • the lack of a clear division between owners of necessary infrastructure and the companies that through the infrastructure compete downstream,
  • the absence of a common deposit system at EU-level which makes barriers for import of beer and soft drinks,
  • to much red tape when the companies reports sales figures to DRS,
  • Carlsberg collecting empty packaging from restaurants with whom they have no contracts,
  • the obligation for the small suppliers to hotels, bars and restaurants (the horeca sector) to use DRS

To solve these problems, the Council suggested that the Minister of Environment

  • as soon as possible states that when the sole right expires in 2008, he will use the authority given him in the
  • Environmental Protection Act to initiate a public tender of DRS. The tender should ensure that the new owners is found outside the beverage business. Thus the problems coming from the breweries’ ownership to DRS will be solved.
  • to work for a common EU deposit system
  • secure that the collection of disposable packaging from the horeca sector is arranged so suppliers can only collect packaging from places where they are already contractors
  • will make it easier for suppliers to report sales to DRS
  • to allow small suppliers to make their own return and deposit system of packaging from the horeca sector

The Minister of Environment answered the statement in a letter from 16 April 2004. He was positive towards several of issues raised by the Council, but would not allow other companies than DRS to collect packaging from the horeca sector.

The Minister of Environment will in order to solve the problems raised by the Council

  • make the question of ownership to DRS a key element in the planned evaluation of DRS in 2006
  • discuss a common EU deposit system with the Commissioner of Environment, but he is pessimistic in regard to find a solution due to the problems coming from the return and deposit systems in Germany and Sweden
  • plan the future public procurement from DRS in a way that eliminate Carlsberg from collecting packing made of glass, which is a solution suggested by the Competition Council
  • ease the administrative burdens for the small suppliers in DRS

The Minister would not allow any other than DRS to collect packaging from beer and soft drink before 2008. He believes the success of DRS relates to it being a unified return and deposit system. The Minister will be positive towards suggestions from DRS to allow small suppliers to promote beverages in one way packaging which is not notified to DRS, if it is done for a short specified period.

The Council is overall positive towards the minister’s suggestions. The Council believes however that the minister is too pessimistic towards the situations in Germany Sweden. The problems means that the return and deposit system is on the agenda in the two countries which makes it easier for the minister and the EU to suggest alternatives. One alternative could be a system organised like DRS, but not owned by the beverages business. The Council is also disappointed by the minister’s lack of enthusiasm towards more a lenient ruling when it comes to the collecting of packaging from the horeca-sector.

The Council finally hope the minister will involve it and the Competition Authority in his considerations about the future public ruling of DRS.