Regulator should set prices of waste collection firms – review
Irish waste collection business exhibits the characteristics of ‘a natural monopoly’
Ireland’s waste collection market, where prices and service levels are set by the firms, is unlike nearly every country in the European Union, the report found. Photograph: David Sleator/The Irish Times
The State’s decision to have several waste collection firms serving the same districts is not delivering competition to households, according to a review commissioned by the Government.
The Competition and Consumer Protection Commission (CCPC) review recommends that a regulator should licence waste firms and then set prices, where necessary, backed by strong enforcement powers.
The waste business in Ireland is extremely complex, the chair of the commission Isolde Goggin said. She added that “State, commercial and consumer interests are continually overlapping and often conflict with each other”.
Ireland’s waste collection market, where prices and service levels are set by the firms, is unlike nearly every country in the European Union, the report found. Instead, one regulated firm should operate in each area.
The report was commissioned in September 2017 by then Tánaiste and Minister for Business, Enterprise and Innovation Frances Fitzgerald after “pay-by-weight” rules were introduced nationally.
Usually, competition between companies should bring benefits for householders and businesses, with a choice of services. Instead, the Irish waste collection business exhibits the characteristics of “a natural monopoly”.
“Just 15 per cent of those with a choice of waste collection provider, have ever switched, with switching much more likely among 25-49 year old, middle class and urban households,” it said.
“Side-by-side competition should allow for multiple suppliers and consumer choice,” says the CCPC, which was asked to investigate the business under the Competition and Consumer Act 2014. “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,” it states.
“In a natural monopoly market as exists it is more cost effective and efficient for one firm to supply the market than to have a number of suppliers,” the competition authority declared.
A typical home is now paying €230-€280 a year in refuse charges, though a third of people questioned for a CCPC survey were unable to say how much they were paying.
Urging tighter regulation of waste firms, Ms Goggin said: “Given the characteristics of the waste collection market, we will likely see less competition rather than more in future.
“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.”
Recommending that waste firms should have strictly-regulated licenses to operate alone, she said: “We believe that it would allow the market to work better for all parties into the future”.
Targeted competitive tendering should be introduced, while less-commercially viable districts should be tied to more profitable districts.
The Irish market is “highly concentrated in places” which benefits incumbents and is a barrier to entry by others.
As a result the State’s ability to implement environmental policy is weakened, while regulation is “fragmented and incomplete”. Meanwhile, customers complaints often “do not, or cannot, influence operator behaviour”.