Household waste collection market
Following a ministerial request under Section 10 (4) of the Competition and Consumer Protection Act 2014, the CCPC was asked to conduct a report into the operation of the household waste collection market.
The CCPC’s report examines the market from a competition, consumer protection and regulatory perspective. The report examines the structure and the evolution of the waste collection market, the economic theory behind utility markets, and compares Ireland’s market to those 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.
The report examines 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 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 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.
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 services 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.
The CCPC considered the manner in which the sector can be best managed and made a number of recommendations for policymakers to consider.
CCPC Recommendations
- 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.
Attachments
The Operation of the Household Waste Collection MarketReturn to Market Studies
