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Ex-Post Evaluation of Competition Law Enforcement Effects in the German Packaging Waste Compliance Scheme Market

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Abstract

We provide an ex-post evaluation of the impact of competition law enforcement activities in the German packaging waste compliance scheme market. Until 2003, the non-profit compliance scheme DSD enjoyed a monopoly in the market. Numerous antitrust cases, however, paved the way for competitive market structures. We show that these enforcement activities resulted in a series of market entries since 2004, a corresponding drop in DSD’s market share, increased innovation and substantial efficiencies. Furthermore, we apply a difference-in-differences approach to show that prices decreased by 63% and to estimate the aggregated consumer welfare gains achieved by 2011 at a total of €13 billion. In the given case imposing a non-profit obligation on the monopolist did not substitute for the efficiency-enhancing effects of competition.

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Notes

  1. See, for example, the OECD “Reference guide on ex-post evaluation of competition agencies’ enforcement decisions” (2016), the OECD “Guide for assessing the impact of competition authorities’ activities” (2014) and the OECD “Factsheet on how competition policy affects macro-economic outcomes” (2014).

  2. See European Commission (2014), Ex-post economic evaluation of competition policy enforcement: A review of the literature, p. 11; OECD (2016), Reference guide on ex-post evaluation of competition agencies, p. 3f.

  3. See decision 2001/837/EG, ABI. L 319/1-29.

  4. See decision 2001/463/EG, ABI. L 166/1-24.

  5. See Annex 2 of the final report of the sector inquiry, available at www.bundeskartellamt.de.

  6. Although we do not have detailed cost data for the period 2004–2010, the collected information suggests reductions in waste disposal costs of around 20-30% between 2004 and 2006 (compared to 2003).

  7. This is due to the fact that it would be inefficient if each compliance scheme would set up a parallel (duplicate) nationwide packaging collection infrastructure. Detailed information on the jointly organized collection infrastructure is provided in Bundeskartellamt, Case summary “Coordination of tenders for sales packaging waste collection services by compliance schemes”, 2011.

  8. Retailers pay the fee to the compliance schemes as a per-article price which depends on the packaging weight. Therefore, from the point of view of the retailers, the packaging waste costs are to full extent marginal costs when selling packaged products to end consumers. As German retail markets are characterized by a sufficient degree of competition (oligopoly), it seems safe to assume that, in reality, retailers will pass on more than 90% of these marginal cost variations to end consumers.

  9. For the calculation of the quantity index the collection quantities of lightweight packaging for the years 1995–2011 are used. We solely use the quantities of lightweight packaging as reference values because 80% of the yearly turnovers are generated with lightweight packaging. If we would additionally include the quantities of waste glass and/or paper/paperboard, the overall quantities would strongly increase due to the higher weight of waste glass/paperboard, thereby distorting the small impact of these waste types on turnovers. The base year for both indexes is the average of years 1995–2000.

  10. See OECD (2016), Reference guide on ex-post evaluation of competition agencies, p. 50.

  11. As can be seen from Table 1 (p. 9), in 2011 the collection costs accounted for 63% of total operational costs.

  12. If compared to other countries, the German system is characterized by high-cost features with regard to the elements mentioned so that we would expect a much higher price level in Germany if compared to other countries.

  13. Monier et al (2014), p. 13, Development of Guidance on Extended Producer Responsibility, Report by Deloitte Bio Intelligence Service, commissioned by the European Commission.

  14. Please note that we do not calculate with absolute values but with index values. In order to calculate the DiD, we apply the following formula: DiD = [(Avg. Index Value packaging 2008–2011)/(Avg. Index Value non-packaging 2008–2011)] − 1.

  15. For Austria and Luxembourg we use the “licence revenues” as published in the annual reports of ARA (Austria) and Valorlux (Luxembourg). For France and Portugal we use the turnover as published in the annual reports of Sociedade Puntoverde (Portugal) and EcoEmballages (France). The turnovers of EcoEmballages might contain some revenues from sales of secondary resources for some years. Those revenues, however, should only account for a low proportion of total turnovers, i.e. the general picture does not change without those revenues. For Italy, data on turnovers/license revenues are not available. We therefore use the license prices for plastic waste reported by CONAI.

  16. Austria, is no “unaffected” market because there were some antitrust enforcement activities as well (although the monopolistic market structure remained unchanged). In addition, there are structural differences if compared to Germany as the compliance scheme in Austria comprises not only household waste but also waste collected from commercial sources (industry).

  17. See (Smuda 2014), Cartel Overcharges and the Deterrent Effect of EU Competition Law, Journal of Competition Law and Economics 10(1), 63–86.

  18. It is worth mentioning that in its sector inquiry, the Bundeskartellamt also included a very conservative estimation of consumer welfare gains of €5.6 by using a before-and-after comparison. This was meant to be a lowest bound estimate. In contrast, in this article we provide a more realistic—“best guess”—estimation relying on the standard methodology of ex-post evaluation, which is the difference-in-differences approach.

  19. See, for example, Schinkel (2017), Can collusion promote sustainable consumption and production?, International Journal of Industrial Organization 53, 371–398.

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Authors and Affiliations

  1. Bundeskartellamt (German Federal Cartel Office), Bonn, Germany

    Arno Rasek & Florian Smuda

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  1. Arno Rasek
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  2. Florian Smuda
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Correspondence to Florian Smuda.

Additional information

The article is based on the final report of the sector inquiry conducted by the Bundeskartellamt into the German packaging waste compliance scheme market; available (in German) at www.bundeskartellamt.de.

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Rasek, A., Smuda, F. Ex-Post Evaluation of Competition Law Enforcement Effects in the German Packaging Waste Compliance Scheme Market. De Economist 166, 89–109 (2018). https://doi.org/10.1007/s10645-017-9306-7

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