Australia's antitrust regulator is considering again extending the time frame for the nation's major supermarket chains to resolve the problem of how to recycle post-consumer soft plastics.
The federal government-funded Australian Competition & Consumer Commission (ACCC) was forced to step in after the only post-consumer soft plastics collection company, REDcycle, suspended its return-to-store recycling program in late 2022.
REDcycle used about 2,000 collection bins stationed within supermarkets to collect "scrunchable" soft plastic, usually polyethylene or polypropylene, including shopping bags, cling film, bubble wrap and food packaging.
Melbourne-based RG Programs & Services Pty. Ltd., which trades as Red Group, established REDcycle in 2011 and initially had support from the rival Coles Group and Woolworths Group supermarket chains. Red Group added Aldi Stores as collection points in July 2022. The supermarkets and a range of major brands paid REDcycle to collect and recycle the post-consumer plastic.
When REDcycle folded, it was discovered the program had stockpiled about 11,000 to 12,400 metric tons of plastic it could not recycle in up to 44 warehouses across three Australian states.
In November 2022, ACCC granted the three supermarket chains interim authorization to resolve the problem, which in 2023 was converted to a 12-month authorization.
Until the program's demise, REDcycle had delivered the plastic to recycling facilities to process into new recycled plastic products.
Elizabeth Kasell, then Red Group managing director, said at the time that REDcycle's "offtake partners" could no longer take the plastic because of the vast quantities being collected and a fire at one manufacturer's site.
In February 2023, REDcycle was declared insolvent and a liquidator appointed. Newspaper reports said REDcycle's failure to pay rent for its warehouses was the catalyst.
The supermarkets required ACCC authorization to avoid their collaboration breaching Australian antitrust laws. Without that proviso, the chains' collaborative actions could breach the competition provisions of Australia's Competition and Consumer Act. ACCC can grant authorization if it considers potentially anticompetitive actions are "in the public benefit."
After receiving their initial authorization, the chains established a Soft Plastics Taskforce, which in 2023 released a Roadmap to Restart plan outlining ways to manage the stockpile and potentially resume collections.
The three chains have now sought a third ACCC authorization to continue collaborating to recycle stockpiled soft plastics and continue a pilot in-store collection program until July 31, 2026.
By law, ACCC must seek feedback on the proposed extension of time. Submissions close on Jan. 24.
In an ACCC statement, Deputy Chair Mick Keogh said: "It is very concerning that the vast majority of the stockpiles left over from REDcycle have not been processed almost two years later. While some limited progress has been made on reducing the stockpiles, the rate of progress is still significantly limited by the available processing capacity of soft plastic processors."
Keogh expects more processors to open in 2025, enabling a larger share of the stockpile to be processed.
ACCC proposes granting the further authorization "to enable continued joint management of the stockpile without further delays."
The pilot collection program operates only in the states of Victoria and New South Wales (NSW) across 43 supermarkets, but Keogh said the ACCC expects the supermarkets to continue "with some urgency" to expand the program to other areas.
The chains must give ACCC quarterly progress reports and the minutes of every Soft Plastics Taskforce meeting.
The most recent quarterly report of Oct. 4, 2024, showed 36 metric tons of soft plastic had been collected through the store pilot program.
The report also showed there were still stockpiles of about 2,360 metric tons in the state of Victoria; about 3,120 tonnes in NSW; about 3,953 tonnes in South Australia; and 66 pallets in Western Australia.
Keogh said the high level of consumer concern meant transparency about the chains' progress was important.
ACCC also is proposing a new condition in the latest authorization to stop the supermarket chains restricting recycling or logistics providers from supplying services to other customers.