International Review of Waste Management Policy - Department of ...

that there have been no significant and conclusively demonstrated examples of a
local authority using these powers to benefit their waste collection services.
These issues appear to have the potential to distort competition. The Indecon Report,
for example, noted that the lack of full cost recovery on the part of local authorities
was likely to affect competition, not to mention, require additional revenue sources to
support the services provided. 95 Allegations that additional time and cost are spent in
the planning process, and that the difference in processes which the private sector
and local authorities are required to go through to obtain permits impose additional
administrative burdens on industry relative to local authorities, might not always be
straightforward to substantiate conclusively, but nor are they so straightforward to
dismiss out of hand.
Finally, if it is the intention of the Government to engender genuine competition in the
market, then save for support for matters such as dealing with legacy issues (where
the past pattern of ownership of landfills might implicitly bias funding in favour of
local authorities), then the differing terms of access to the Environmental Fund also
appear to have the potential to distort competition.
Local authorities have traditionally occupied a strategic position in waste
management. They have, historically, owned and operated landfills, and have been
the main collectors of household waste. In the period following the Waste
Management Act, one might reasonably assume that as costs increased, so local
authorities, as landfill operators, may have sought to benefit from the scarcity of void
space in the country. This could have allowed landfill prices to be raised above levels
which might have prevailed in a more competitive market. In addition, where the
same local authority both operated the household collection service and operated the
landfill, there would have been scope for differential pricing in which commercial
collectors making use of the site were effectively cross-subsidising the costs of
landfilling household waste.
Furthermore, local authorities will also have had the power to engineer continuing
scarcity of void space provision, so prolonging their somewhat privileged position. The
potential for abuse of what is, effectively, market power appears to have been
recognised in an ESRI report: 96
65
‘Where Local Authorities continue to be the only supplier of services in an
area, there is a requirement to ensure that pricing reflects efficient levels of
operation. Currently, Local Authorities act as suppliers, planning authorities
and environmental regulators in the waste management industry. This means
they are potentially conflicted in dealings with private operators, which could
distort competition. With each Local Authority acting as regulator, there is
95 Indecon International in association with the Institute of Local Government Studies at University of
Birmingham (2006) Indecon Review of Local Government Financing, Report Commissioned by the
Minister for the Environment, Heritage and Local Government.
96 John FitzGerald and Edgar Morgenroth (2006) Ex-Ante Evaluation of the Investment Priorities for the
National Development Plan 2007-2013, ESRI Report Commissioned by Department of Finance,
October 2006.
International Review of Waste Policy: Annexes