ACCC proposes to approve SA councils’ joint waste tenders

14 September 2018

The ACCC is proposing to grant authorisation to four Adelaide councils to jointly procure certain waste management services.

The four councils, Adelaide, Charles Sturt, Marion and Port Adelaide Enfield, and a council-owned procurement body called Council Solutions, are seeking authorisation to appoint common providers to:

  •   supply waste processing and disposal services for recyclables, organics and residual waste, and
  •   supply collection services for bulk bins, hard waste and street litter.

The councils will run tender processes for each of these six waste streams.

“The ACCC considers that running joint tender processes is likely to improve the four councils’ purchasing power,” ACCC Commissioner Sarah Court said.

“Coming together to offer a larger block of work is likely to encourage more competition from suppliers than if each council contracted separately. This is likely to result in cost savings that can be passed on to residents in lower costs or improved services.”

“Some suppliers have raised concerns that the joint tenders will make it more difficult for them to participate, and will reduce competition and increase prices for waste services in Adelaide, particularly in the longer term. Our preliminary view is that this is unlikely; there will be a number of competitors for these tenders, and the unsuccessful tenderers will continue to have other opportunities to provide waste management services in South Australia,” Ms Court said.

The ACCC has issued draft determinations and expects to make final determinations in late October after considering submissions on the draft determination.

The ACCC has also today granted interim authorisation, which will allow the councils to commence the tender processes, with the aim of having contracts in place by May 2019, while the ACCC continues its considerations. However, no contracts can be entered into unless and until the ACCC makes a final decision granting authorisation.

Further information about the applications for authorisation, including copies of the ACCC’s draft determinations and public submissions, is available at Council Solutions and others (ancillary) and Council Solutions and others (processing).

Background

In the context of procuring these services, councils may be considered to be each other’s competitors. Therefore by conducting their procurement jointly rather than individually they risk breaching competition laws unless they have ACCC authorisation, which provides immunity from court action.

Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.

Interim authorisation allows parties to engage in conduct while the ACCC is considering the substantive application for authorisation.

Council Solutions is a regional subsidiary established in December 2012 in accordance with the Local Government Act 1999 (SA) that undertakes collaborative procurement, contract negotiation and management on behalf of its constituent Councils. Its constituent councils are Adelaide City Council and the Cities of Charles Sturt, Marion, Onkaparinga, Salisbury and Tea Tree Gully.

It is common practice throughout Australia for local councils to jointly tender for waste services to reduce transaction costs, pool resources and expertise and achieve economies of scale. The ACCC has authorised 30 such arrangements, concluding they were likely to result in a net public benefit.

Council Solutions and the Participating Councils have lodge three separate applications for authorisation with the ACCC covering joint procurement of:

  •    kerbside waste collection services
  •    receival and processing of recyclables and organics and receival and processing or disposal of residual waste, and
  •    collection of bulk bins (used in high density residential, hospitality, and retail facilities), hard waste (such as bulky household items including white goods and furniture) and street litter from bins located on streets, footpaths, parks and other public places.

On 20 July 2018 the ACCC released a draft determination proposing to grant authorisation to the proposed kerbside waste collection joint procurement arrangements.

The draft determinations released today relate to receival and processing application and bulk bin, hard waste and street litter collections application.

Release number: 
183/18
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