On October 27, 2020, the ICA issued a decision (the “Decision”) fining the Italian Consortium for the Collection, Recycling and Recovery of Plastic Packaging (“COREPLA”) € 27,400,477 for allegedly abusing its dominant position in the market for management of plastic waste recycling services.
Factual and legal background
Article 221 of the Consolidated Act on Environment establishes the principle of Extended Producer Responsibility (“EPR”), under which manufacturers of plastic packaging are subject to significant financial responsibility penalties in case of non- compliance with their obligations of 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 household 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 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 its 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 (the “Ministry”) 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 within two years’ time. The temporary license was due to expire on April 24, 2020 and was extended until June 30, 2021.
The opening of the investigation and the interim measures
On April 30, 2019, following a complaint by CORIPET, the ICA opened an investigation into COREPLA’s alleged exclusionary practices, including its claiming of exclusive rights on all the household plastic waste, as well as enforcing exclusive clauses in the agreements in force with the local authorities and the sorting plants.
At the same time, the ICA opened interim proceedings to assess whether urgent remedial measures were required in order to prevent COREPLA’s conduct from excluding its only competitor, CORIPET, from the market.
On October 29, 2019, 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 was entitled; and (vi) assign to CORIPET all the plastic waste that should have been allocated to it from January 1st, 2019, until the date of implementation of these measures.
The relevant market and COREPLA’s dominant position
The ICA found a significant difference in the management of household as opposed to industrial plastic packaging. The latter is collected directly from the private facilities where it is turned into waste, while the first needs to be collected from households in urban areas through specific services provided by local authorities. For this reason, the ICA defined the relevant product market as the provision of EPR compliance services for household plastic packaging, which is part of EPR compliance services for all plastic packaging. The geographic market was found to be national in scope.
Against this background, the ICA found that COREPLA had been the sole consortium authorized to provide EPR compliance services for household plastic waste until CORIPET entered the market in 2018. COREPLA kept operating in a quasi-monopoly position even after CORIPET’s entrance, as it continued managing the vast majority of household plastic waste produced in Italy. Therefore, COREPLA was found to hold a dominant position in the relevant market.
In the ICA’s view, COREPLA engaged in four practices aimed at making it impossible for CORIPET to meet the objectives of effectiveness, efficiency and self-sufficiency required by the Ministry to grant it a permanent authorization.
First, the ICA found that COREPLA enforced exclusivity clauses in its contracts with local authorities and sorting plants to prevent CORIPET from entering into an agreement with them.
Secondly, the ICA held that CORIPET organized an auction to try to sell at least part of the plastic waste it was entitled to manage. However, COREPLA allegedly warned sorting plants not to deliver the plastic waste to the auction winners, thus forcing CORIPET to annul the auction.
Thirdly, the ICA found evidence that the members of CORIPET stopped paying their membership fees to COREPLA when they joined the new consortium. This led to lower revenues for COREPLA, which stopped receiving payment for the management of the plastic waste corresponding to the quota produced by CORIPET members. Notwithstanding such loss of revenues, COREPLA allegedly refused to let go the quota of plastic waste produced by CORIPET members and kept managing the totality of plastic waste even if the payment received from its members was no longer sufficient to cover total costs. The ICA believed that this was part of a predatory strategy conceived and put into effect by COREPLA, which the dominant player deemed to be sustainable in the short term based on the expectation that CORIPET’s market exit would allow it to later recover all the lost profit.
Lastly, COREPLA allegedly refused to reach an agreement with CORIPET that would allow the latter to manage a quota of the plastic waste.
Therefore, the ICA concluded that COREPLA abused its dominant position in the relevant market.
The ICA imposed on COREPLA a fine amounting to € 27,400,477. In the ICA’s view, COREPLA’s breach of Article 102 TFEU was particularly serious because it was aimed at hindering its only competitor’s entrance in the market. COREPLA’s abuse was found to have started on April 24, 2018 — when CORIPET was granted a temporary authorization — until December 31st, 2019 — when COREPLA complied with the ICA’s interim measures.
 ICA Decision of October 27, 2020, No.28430, Case A531, Riciclo imballaggi primari/Condotte abusive COREPLA.
 Legislative Decree No. 152/06.
 ICA Decision of October 29, 2019, No. 27961.