CCPC report recommends introduction of economic regulation in the household waste collection market
September 28, 2018
The Competition and Consumer Protection Commission (CCPC) has today published its report assessing the household waste collection market. The CCPC was asked to conduct this report following a Dáil debate and subsequent ministerial request under Section 10 (4) of the Competition and Consumer Protection Act 2014.
The CCPC’s report examines the market from a competition, consumer protection and regulatory perspective. The report examines the current structure and the evolution of the waste collection market, the economic theory behind utility markets, and compares Ireland’s market against that of other European countries. It makes recommendations as to the steps that could be taken to ensure that the market delivers the best outcomes for the State, consumers and operators.
Speaking about the report, Isolde Goggin, Chairperson of the Competition and Consumer Protection Commission said, ‘Collection of domestic waste is of critical importance to households and to the protection of our environment. Our report has found that the waste collection market in Ireland is extremely complex. State, commercial and consumer interests are continually overlapping and often conflict with each other, and these factors have played out differently in different parts of the country. As a result, we believe that a review of Government policy and specifically the introduction of economic regulation is required to make this market work better for consumers, industry and the State, in the medium and long term.’
The CCPC’s report examined the current market structure, which is known as side-by-side competition. This type of model means that, subject to licensing, waste operators can offer their services in any location and so there may be more than one operator in a given area. This structure also means that price and service levels for the collection of waste from households are determined by private operators. In this context, Ireland’s waste collection market is atypical among almost all countries in Europe.
Usually, competition brings better outcomes for consumers, businesses and the economy. The existence of multiple suppliers drives businesses to compete on price, customer service or products, and consumers have the power to influence by changing provider. However, in a natural monopoly market it is more cost effective and efficient for one firm to supply the market than to have a number of suppliers. The CCPC’s analysis has found that the household waste collection market exhibits characteristics of a natural monopoly, including strong local economies of density and scale, high fixed costs and a large cost advantage for a single operator.
Ms Goggin commented: ‘In theory, side-by-side competition should allow for multiple suppliers and consumer choice. However, in reality, the domestic waste collection market in Ireland is highly concentrated and becoming increasingly so. As a result consumers have little or no power to influence the behaviour of operators in this market.
There are generally two types of solutions to this type of situation: more operators and increased competition, or economic regulation. Given the characteristics of the waste collection market, we will likely see less competition rather than more in future. Economic regulation is therefore necessary.
In developing our recommendations, we looked to the experiences of other European countries. In the EU countries we surveyed, the State has maintained a high level of control, either by managing the collection of waste directly or by contracting it, by competitive tender, to the private sector. In Ireland, although there are multiple bodies tasked with regulation and enforcement activity in this sector, regulation generally relates to environmental policy. The state has few sector-specific economic levers to ensure that its strategic policy on waste collection service for households is delivered and that environmental goals are achieved. Introducing economic regulation would remedy this, and would also allow for standards of consumer protection to be equal to those of other utilities. While not underestimating the challenge of this change to the market as it is currently structured, we believe that it would allow the market to work better for all parties into the future.
The CCPC has considered the manner in which the sector can be best managed and has made a number of recommendations for policymakers to consider in this regard.
- Recommendation: Establish an economic regulator for household waste collection, with consideration to be given to the function of the regulator in relation to economic licensing, data collection and analysis, market design and consumer protection.
- Recommendation: A review is undertaken of the Government’s 2012 policy document, “A Resource Opportunity: Waste Management Policy in Ireland”. The CCPC suggests that this review could be usefully informed by the evidence collected in the course of this study and that the review be conducted in the context of the recommendation to establish an economic regulator.
- Recommendation: Ensure that all of the State’s resources are co-ordinated to deliver optimal outcomes for this market. The introduction of a new regulatory regime should also have a central objective to use these existing bodies in a manner that creates efficiencies, wherever possible. Consideration should also be given to utilising and extending existing structures to create a new regulatory regime.
The CCPC’s report is available here.
Notes to Editor
Under Section 10 (4) of the Competition and Consumer Protection Act 2014, only the Minister for Business, Enterprise and Innovation may request the CCPC to carry out a study or analysis and on 25 September 2017, An Tánaiste and Minister for Business, Enterprise and Innovation, formally requested that the CCPC carry out this study.Return to News