In November 2015, Council Solutions and five metropolitan Adelaide councils (Adelaide City Council, Charles Sturt, Marion, Tea Tree Gully, and Port Adelaide Enfield) (the Applicants) sought authorisation from the ACCC to jointly procure, negotiate and contract four service streams in South Australia for a period of 17 years.  The service streams include waste collection services, receipt and processing of recyclables, receipt and processing of organics and waste disposal services.

In February 2016, the ACCC issued a draft determination granting interim authorisation for the proposed conduct and indicated authorisation would be granted to the Applicants for the 17 year period.  In response, the ACCC received over 35 public and anonymous submissions from interested parties.  All but two submissions raised concerns about the proposed conduct.  The ACCC used this information to assess the benefits and detriments of the proposed conduct to the public.

The ACCC has previously authorised local councils to jointly tender for the provision of waste services to pool resources and achieve economies of scale.  However, the current proposal was the first which proposed to include all four service streams across five councils in a single tender using a Request for Proposal (RFP) process rather than a Request for Tender (RFT).  

The breadth and complexity of the coverage of services was a key concern raised in many of the opposing submissions.  Further, the ACCC considered that the RFP, which offered the participating councils greater flexibility in the provision of the four service streams, may introduce uncertainty and complexity for waste service suppliers and create implications for competition.

The ACCC can only grant authorisation if the proposed conduct meets the ‘net public benefit tests’ under section 90 of the Competition and Consumer Act 2010 (Cth), that is, that the likely benefit to the public outweighs the likely detriment of reduced competition.

The ACCC considered the potential public benefits of the proposed conduct to include:

  • small improvements in efficient community education;
  • small improvements in efficient in the supply of recyclables and organics processing; and
  • small improvements in environmental outcomes.

However, the ACCC concluded that these did not outweigh the potential public detriment, including:

  • deterring or preventing some potential suppliers from tendering or from submitting competitive bids;
  • reducing competition for the supply of waste services to participating councils in the longer term; and
  • reducing competition for the supply of waste services to non-participating councils.

On 20 December 2016, the ACCC denied authorisation and revoked the interim authorisation.  The ACCC concluded that it was not satisfied the benefit to the public from the proposed conduct would outweigh the detriment to the public constituted by the lessening of competition.

Authors: Scott AldenVictoria Gordon and Lauren Stables.

Contacts

Melbourne

Stephen Natoli, Partner
T: +61 3 9321 9796
Estephen.natoli@holdingredlich.com

Kyle Siebel, Partner
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E:kyle.siebel@holdingredlich.com

Sydney

Scott Alden, Partner
T: +61 2 8083 0419
Escott.alden@holdingredlich.com

Christine Jones, Partner
T: +61 2 8083 0477
Echristine.jones@holdingredlich.com

Brisbane

Troy Lewis, Partner & National Head of Construction and Infrastructure
T: +61 7 3135 0614
Etroy.lewis@holdingredlich.com

Stephen Burton, Partner
T: +61 7 3135 0604
Estephen.burton@holdingredlich.com

Suzy Cairney, Partner
T: T: +61 7 3135 0684
Esuzy.cairney@holdingredlich.com

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