The Bundeskartellamt in Bonn sees the decision of the Supervisory Board of the DSD (The Green Dot – Dual System) of 11 October 2004 to dismantle the cartel-like corporate structure of the company as an important landmark decision to open up the company to more competition.

Up to now, after companies from the waste management sector left the circle of silent shareholders last year, large companies from the trade and industry have been shareholders or silent partners in DSD. Under the Packaging Ordinance these companies are obliged to take back and dispose of the packaging which they have brought into circulation and are consequently customers of the services provided by DSD. On implementation of the Supervisory Board’s decision the ratio of original shareholders will fall below 25 % and large companies from the trade or industry will no longer be involved in DSD AG.

The Bundeskartellamt is aware of the fact that a change to the shareholder structure will alter the cartel-like character of the company but not automatically alter the dominant position which DSD still holds in the market for taking back sales packaging. DSD thus remains subject to abuse control under competition law. However the Bundeskartellamt assumes that with the change in shareholder structure the structural conditions for more competition in this market will also be considerably improved. For it is likely that the demand side will base their choice of disposal system first and foremost on purely economic aspects. Their function as DSD’s shareholders with the associated possibilities of influence and vested interests will no longer play a role in the future. This should open up greatly improved opportunities for competition for newcomers to the market, release additional potential cost-cutting capacities for DSD and thus ultimately also benefit consumers.

The positive effects of competitive market behaviour which is not burdened by vested interests could already be witnessed from the invitation to tender for service contracts put out by DSD. In order to allay the competition concerns of the Bundeskartellamt the new Board of Directors of DSD decided in early 2003 to implement for the first time a transparent and non-discriminatory system of awarding service contracts to the waste disposal companies. In order to end the interlocking interests it was important that waste management companies abandoned their participation in DSD.

The first call for tenders did not bring about any real competition in bidding for many contract areas with the result that in 2004 DSD had to put out a second invitation for tender for almost half of all its contract areas. In this second invitation for tender DSD, at the Bundeskartellamt’s recommendation, had considerably improved the basic conditions for competition, above all for small and medium-size disposal companies, which thus had an increased chance of success. As a result, from 2005 the costs of collecting and sorting the “yellow sacks”, in comparison to the charges paid up to 2003, will be reduced by approx. 200 mio. €, which corresponds to a reduction of more than 20 per cent.

The President of the Bundeskartellamt, Dr Böge, stated: “The Bundeskartellamt is very satisfied with DSD’s development towards a more competitive structure. The case shows in particular that competition is not just an abstract guiding principle for economic activity but ultimately benefits the consumer.”

In Böge’s view the willingness of the Board of Directors and the Supervisory Board of the DSD to break with DSD’s model of cooperative consensus and to face competition with all its opportunities and risks, has been a decisive factor in bringing about this solution. “The Bundeskartellamt has announced that it considers closing the pending prohibition proceedings against DSD AG once the Annual General Meeting has approved the Supervisory Board’s decision and the necessary measures have been irreversibly implemented before the end of the year.”