On October 29, 2019, the Italian Competition Authority (the “ICA”) issued a decision (the “Decision”)[1] imposing interim measures on the Italian Consortium for the Collection, Recycling and Recovery of Plastic Packaging (“COREPLA”) in the framework of the investigation it opened six months earlier into COREPLA’s alleged abuse of dominant position in the market for management of plastic waste recycling services. According to the ICA, the interim measures will prevent serious and irreparable harm to competition likely to be caused by COREPLA’s conduct, which prima facie constitutes an infringement of Article 102 TFEU.

Factual and legal background

Article 221 of the Consolidated Act on Environment[2] establishes the principle of Extended Producer Responsibility (“EPR”), under which manufacturers of plastic packaging are subject to significant financial responsibility for the treatment and disposal of post-consumer products. Plastic packaging manufacturers can comply with their statutory obligations, including those of waste management and physical collection, by participating in consortia that treat and recycle plastic waste.

The recycling chain of plastic waste is organized into the following segments. First, local authorities collect household plastic waste and take it to so-called sorting plants. In these plants, the waste is processed and allocated to the consortia of plastic manufacturers according to quotas that reflect the plastic manufacturers’ participation in each consortium. The consortia then pay the local authorities and the sorting plants for their activity and auction off the plastic waste to start the treatment and disposal process.

COREPLA had been the only such consortium in Italy for a number of years, until certain plastic manufacturers decided to constitute another consortium, called CORIPET. In April 2018, the Italian Ministry of Environment granted CORIPET a temporary license subject to the achievement of the objectives of effectiveness, efficiency and self-sufficiency necessary for the granting of permanent authorization in two years’ time. The temporary license was due to expire on April 24, 2020.

The opening of the investigation

On April 30, 2019, following a complaint by CORIPET, the ICA opened an investigation to assess whether COREPLA restricted competition in the relevant market by means of certain exclusionary practices, including claiming exclusive rights on all the household plastic waste, as well as enforcing exclusive clauses with the sorting plants.

At the same time, the ICA opened sub-proceedings pursuant to Article 14-bis of Law No. 187/90 to assess whether interim measures were required in order to prevent COREPLA’s conduct from excluding its only competitor CORIPET from the market.

The ICA’s preliminary assessment

According to the ICA, the relevant product market for the purpose of the interim measures decision can be defined as the market for the management of plastic waste recycling services in compliance with EPR obligations, even though the ICA may adopt a different product market definition in its substantive assessment of the case. COREPLA had been for years the sole operator in this market—which is national in scope—thus holding a prima facie dominant position.

In the ICA’s preliminary view, COREPLA allegedly: (i) claimed ownership of all the plastic waste collected by local authorities and taken to sorting plants; (ii) did not agree with CORIPET regarding a way to establish the quotas of plastic waste to which each of them were entitled, claiming that CORIPET had to enter into ad hoc agreements with local authorities first; (iii) enforced exclusive clauses with sorting plants to avoid the allocation of plastic waste to CORIPET; and (iv) auctioned plastic waste that should have been managed by CORIPET.

The ICA held that COREPLA’s conduct was prima facie aimed at hindering CORIPET’s activity in the market and force its exit. It therefore came to the conclusion that COREPLA’s behavior constituted an abuse of dominant position, in violation of Article 102 TFEU.

In addition, the ICA concluded that, if COREPLA’s ongoing conduct were allowed to continue, CORIPET would likely fail to fulfill in time the objectives of effectiveness, efficiency and self-sufficiency necessary for the Ministry of Environment to grant it a permanent authorization. This would ultimately result in CORIPET’s exit from the market, and thus in serious and irreparable harm to competition.

The Decision

For these reasons, the ICA ordered COREPLA to: (i) modify the contracts with local authorities so as to allow the allocation of plastic waste to consortia other than COREPLA; (ii) modify the contracts with sorting plants so as to allow the allocation of plastic waste to consortia other than COREPLA; (iii) cease auctioning plastic waste that should have been allocated to CORIPET; (iv) cooperate with CORIPET in order to reach agreements on preliminary management issues, such as the determination of quotas; (v) assign to CORIPET by April 24, 2020, the portion of plastic waste to which it is entitled; and (vi) assign to CORIPET all the plastic waste that should have been allocated to it from January 1, 2019, until the date of implementation of measure (v).

COREPLA was ordered to comply within 45 days, which the ICA deemed feasible and proportionate.

[1]              ICA Decision No. 27961, Case A531, Riciclo imballaggi primari/Condotte abusive COREPLA.

[2]              Legislative Decree No. 152/06.