On September 13, 2022, the ICA closed an investigation into an alleged abuse of dominance in the domestic market for the management of the recycling of polyethylene (“PE”) goods by the POLIECO consortium (“POLIECO”), the incumbent operator for end-of-life management of PE goods on behalf of producers and users, by accepting and making binding the commitments offered by POLIECO.[1]
In February 2021, private consortium ECOPOLIETILENE (“EP”) filed a complaint with the ICA, alleging that POLIECO, had carried out an abusive strategy aimed at foreclosing EP’s entry on the relevant market for the management of the recycling of PE goods.
By way of background, Legislative Decree No. 152/2006 (the “TUA”) requires, among other things, players active in the PE goods supply chain (“PE Players”) to manage the end-of-life of their own PE waste. The TUA states that PE Players must necessarily choose whether to join the incumbent consortium POLIECO (which was established by the TUA, and, until 2020, was the only operator active in the recycling of PE goods), or to establish another consortium (like it was the case for EP). A newly-established consortium must be authorized by the Italian administration before starting operations. In addition, PE Players are required to pay environmental fees to bear the costs of the activities carried out by their consortium.
The ICA preliminarily found that POLIECO had carried out a number of practices aimed at discouraging the members of EP from leaving the consortium to join POLIECO, e.g., by informing the members that the authorization for EP was still under discussion before the administrative courts, or requiring payment of past contributions in exchange of significant discounts. With regard to potential new customers, POLIECO (i) offered significant discounts and concessions for unpaid past contributions, and/or (i) threatened or started lawsuits for the payment of past contributions.[2]
To remedy the ICA’s concerns, POLIECO offered the following commitments:
- to allow any PE Player to regularize its position regarding past unpaid contributions by submitting a “compliance proposal” to any of the operating consortia (i.e., POLIECO or EP). POLIECO also proposed to outline together with EP common ways for carrying out controls and regularizing PE Players’ positions; and
- to propose to settle any lawsuit it had initiated against PE Players concerning the non- fulfilment of environmental obligations under the TUA, leaving to its counterparties the choice of continuing the lawsuit or regularizing their position alternatively with POLIECO or EP.
The incumbent consortium also proposed to transfer all environmental contributions paid to POLIECO or EP in the past to a trust fund aimed at supporting initiatives in case of environmental emergencies or, in the alternative, for the management of waste of PE-based goods previously placed on the market.
[1] See ICA Decision No. 30300 of September 13, 2022, Case A 545 – Consorzio Polieco/Condotte Anticoncorrenziali.
[2] Although the TUA establishes the obligation on PE Players to pay overdue contributions, it does not expressly identify the operator in charge of collecting them. In its decision to open the investigation, the ICA preliminarily found this legal gap to be at the basis of POLIECO’s alleged exclusionary conduct, taking the view that the alleged strategy was implemented with regard to both members of EP and to potential new customers, with a view to raising PE’s costs. Interestingly, in order to identify the legal basis for offering the discounts for past contributions, POLIECO did not refer to its by-laws, but rather to the Ministerial Decree approving it, thus suggesting that the favorable regime for members of POLIECO was of public nature.