The Place of Competition Agencies In The Transition To A Circular Economy
By Ninette Mwarania -Manager, Policy and Research, Competition Authority of Kenya
Recently, I was among thirty delegates attending a three-day conference in a Nairobi hotel. Each participant was served two half-liter plastic water bottles every day, translating to 180 single-use bottles in the event. This exemplifies a linear economic model where a single-use product is disposed, shifting the cost burden to consumer and the environmental cleanup liability to the Government.
When the number of single-use bottles consumed daily in Kenya is extrapolated, it is no wonder that there are growing mounds of plastic at dumpsites and others clogging waterways and sewer systems. The solution is a transition from a linear to a circular economy.
The latter contributes to sustainability initiatives by reducing pollution and conserving resources. A circular economy also extends the lifecycle of products through sharing, reusing, repairing, refurbishing, and recycling. Revisiting my conference experience, the hotel would have promoted sustainability by serving water in reusable glass bottles.
The linear-circular economy model in the production-consumption line minimizes waste and attendant environmental harm, reduces the raw materials required, and promotes innovative solutions that maximize use of materials that have more longevity in supply chains.
In Kenya, services that support a circular economy, such as garbage collection services are primarily conducted by the County Government and complemented by unregulated MSMEs. With Kenya’s 15.2 million urban population producing over 2,500 tonnes of solid waste daily, the garbage collection services are insufficient to support a circular economy.
It is therefore urgently necessary to formulate policies that formalize the garbage collection sector in order to enhance the capacity of sector players, in terms of infrastructure. It is also critical that we better appreciate the circular economy ecosystem and offer optimal policy interventions.
International best practice places the responsibility to manage products at the end of their cycle on the producer/manufacturer through establishment of Producer Responsibility Organizations (PROs). This is undertaken through Extended Producer Responsibility (EPR) compliance schemes.
Kenya’s environmental regulatory agency recently developed a compliance framework on EPR that emphasizes the importance of sustainable waste management, and collaborative efforts towards that end.
On the other hand, competition agencies, through their advocacy role, safeguard against possible market distortions in the development of regulations that promote competitive markets. For instance, PROs may enter into formal agreements and cooperative frameworks for joint research, collection, and take-back schemes, among others. Such agreements or collaborations create avenues for members to agree on certain aspects of trade and exchange otherwise commercially sensitive information. This may contravene the provisions of the national competition and data protection laws.
With regard to competition law, these PROs would require specific exemptions from the Competition Authority of Kenya whose mandate is safeguarding markets against distortions that limit competition. Further, there should be a level playing field that facilitates multiple PROs to enhance competition, mitigate the potential risk of creating duopolies for individual product PROs, and offer innovation and cost alternatives.
Innovative ways to reuse or recycle waste materials may enable firms to enter and compete in new markets, especially where recycled materials are valuable input in the production process. The recycling process may also lead to the creation of new markets and circular products, attract new investors, create new employment opportunities and generate more competition in the relevant markets. This will further promote efficiency, expand consumer choice, spur innovation, and regenerate nature.
Competition law can encourage such ventures through various ways. Firstly, by setting block exemptions that allow vertical or benign agreements between firms or between undertakings with no significant or appreciable effect on competition in the market, and which do not contain hard-core restrictions.
Secondly, and as the National Treasury Cabinet Secretary stated in Financial Year 2023/2024 Budget Statement, there is room to revise upwards the merger thresholds for MSMEs in order to encourage new entrants to enter and encourage consolidations that generate economies of scale. Joint ventures that facilitate access to new markets and distribution networks can also contribute to the development of new circular products.
It is therefore imperative that competition law, including other regulatory and licensing requirements, appreciate the societal benefits of sustainability objectives while actualizing their primary mandates. Therefore, the role of competition agencies in the green economy cannot be underscored.
To quote Anthony T. Hincks, “Plastics will be the main ingredient of all our grandchildren’s recipes” then “#BeatPlasticPollution” is an urgent call for us all to act, to reduce the production and consumption of single-use plastic bottles and other non-recyclable materials. The action towards single-use plastic bottles, and release of other harmful substances into the environment, will go a long way in complementing government of Kenya’s plastic bags ban since 2017.
For feedback, email info@cak.go.ke
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