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A Better Package Deal?

5 minute read

Jana Debus instantly recognizes the circular, yin and yang-like symbol imprinted discreetly on her pizza cartons, pickle jars, and cans of Coke. The Grüne Punkt (Green Dot) means she can take the material to her local recycling bin and dump it in the appropriate container, knowing that it will be reprocessed into newspapers, bottles and even telephones.

Although seen by many consumers as a stamp of environmental approval, the ubiquitous symbol wasn’t the invention of the German government but of a German company called Duales System Deutschland (DSD). The Cologne-based operation collects fees totaling $2 billion from 19,000 packagers in Germany and uses the money to pay for local recycling programs. The symbol has been licensed to similar organizations in 11 other European countries, reaching 40,000 packagers across Europe, and is a protected trademark in 170 countries. Whether you call it a Zeleny Bod (Czech Republic) or a Ponto Verde (Portugal), the little circle was stamped on 460 billion packages last year, which DSD says makes it the most widely distributed trademark in the world.

In fact, DSD may be too successful. Last month the European Commission ruled that the company’s 80% market share in Germany constitutes a monopoly and that its practice of requiring any company wanting the Grüne Punkt on its packaging to pay the full cost of recycling was old-fashioned abuse of market position. Now companies that can prove they do their own recycling may use the green dot as long as they pay DSD a flat licensing fee. And two weeks ago Germany’s ruling coalition came up with a new plan that also undercuts DSD’s trade: redeemable deposits of 22 to 44 on disposable bottles and cans as of Jan. 1, 2002.

The original complaint against DSD came from a group of Cologne cosmetics companies that wanted to put the symbol on hair-care products delivered to beauty salons. They figured that half the products are sold to consumers and would thus find their way into DSD bins. The other half, used in the salons themselves, could easily be collected on site and sent to a recycling company that charged 40% less. They offered to pay DSD a reduced fee for using the dot, and when they were told they must pay in full, the cosmetics companies called on Brussels. Last month, the Commission told DSD to change its ways.

DSD was formed in 1990, shortly before Germany passed its Töpfer Ordinancenamed for then Environment Minister Klaus Töpferwhich required companies to recycle their product packaging, by either taking it back or joining a comprehensive, nationwide recycling program. Töpfer himself helped create that program by rallying a consortium of packaging companies and getting them to set up DSD as a nonprofit, industry-owned network that would take over the funding of city-owned recycling programs and pay for them by collecting fees from producers. As other capitals passed similar ordinances, consortiums in other European countries simply signed up with DSD.

But not all of them. In 1997, Britain came up with a system of Packaging Waste Recovery Notes, or PRNS. These are certificates issued by companies that receive and recycle waste which are sold to companies that produce it. So every time a steelmaker turns a heap of scrap into a steel beam, it gets to print a prn and sell it to outfits that turn trees into pizza cartons. Under the British law, packaging manufacturers and retailers among others have to buy a certain number of prns for each ton of material they produce. The goal is basically the same as in Germany: companies that generate waste have to prove that they’ve paid for at least some of it to be recycled. But in the British system, there is an element of choice, making it easier for newer, more efficient recycling companies to jump in.

Both systems have drawbacks. While the PRN option is cost-effective, it’s not yet as comprehensive as the German one. For example, it allows companies to buy prns instead of recycling—a practice supporters say will change as government recycling targets increase, pushing PRN prices higher. DSD, on the other hand, oversees a network of recycling bins within a short walk of everyone’s home. But it’s more expensive than in Britain where, according to DSD, recycling firms can cherry-pick the easiest, cheapest and most profitable materials and leave the rest.

“The Commission’s decision makes sense to me,” says Debus, a physical therapist in Cologne. “If someone can do it cheaper, why not let them?” DSD boss Wolfram Brück has an answer: “Basically, this is just an invitation for free riders to take advantage of DSD and its customers,” he says, adding that his company achieves competition through bidding among its subcontractors. He vows to fight the decision. As for the bottle-deposit initiative, DSD has so far remained quiet, though it could cost the company $550 million in lost fees. 1

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