Australian regulator grants supermarket chains permission to cooperate on soft plastic recycling

Major Australian supermarket retailers have received permission to cooperate to find a solution to plastic film recycling.

The retailers had to seek permission from the Australian Competition & Consumer Commission (ACCC), a Federal Government body that regulates anti-competitive behavior.

The three largest supermarket chains, Coles, Woolworths and Aldi, will establish a Soft Plastics Taskforce to "explore solutions to address the immediate effects of REDcycle suspending its return-to-store soft plastics recovery program, following a conditional ACCC interim authorization," ACCC said in a statement.

Melbourne-based RG Programs & Services Pty. Ltd., which trades as Red Group, established REDcycle a decade ago. It installed collection bins at Coles and Woolworths supermarkets and more recently Aldi stores, to collect "scrunchable" soft plastic. But on Nov. 9, it was forced to stop collecting post-consumer soft plastic because of a lack of facilities to recycle it.

ACCC Deputy Chair Mick Keogh said ACCC had moved quickly to approve the chains' interim application because the REDcycle program's suspension raised "community concerns and an urgent need to address the environmental risk of the existing stockpile and future waste."

ACCC's interim authorization enables the supermarkets to engage in meetings of the Soft Plastics Taskforce that will consider and seek to develop and implement a short-term solution for storing, transporting, processing, recycling and managing soft plastics.

"The application envisages that a longer-term solution to recycling soft plastics is needed and the proposed conduct will not detract from or adversely affect the development of longer-term solutions," Keogh said.

ACCC can grant authorization for conduct that could otherwise potentially violate the competition provisions of Australia's Competition and Consumer Act if it is satisfied the likely public benefit outweighs any public detriment.

"This interim authorization allows cooperation between the major supermarket retailers for a limited period and for the particular purpose of exploring options for managing soft plastics to minimize the volume that may end up in landfill," Keogh said.

ACCC has given the supermarket chains reporting conditions to ensure they find a resolution quickly and is engaging with "industry stakeholders and representative bodies" to minimize the risk of consumers being misled by representations about recycling soft plastics.

The closure prompted angry social media responses in Australia with consumers complaining they cannot now recycle soft plastics and many were upset they were not told the plastic was being warehoused not recycled.

Until the program's demise, REDcycle had delivered the plastic to its partner recycling facilities to process into new recycled plastic products.

Elizabeth Kasell, Red Group managing director, said REDcycle's "offtake partners" can no longer take the plastic, which was being stockpiled in warehouses.

She said Close the Loop Ltd., a publicly listed, Melbourne-based recycler and REDcycle's "largest volume offtake partner" had a "significant fire" in June 2022 at its TonerPlas manufacturing facility, which makes an asphalt additive. Close the Loop says the TonerPlas line is being upgraded and will be back in full production by July 2023, after which it will "require large volumes of soft plastic material to meet demands."

REDcycle said Melbourne-based Replas, owned by Repeat Plastics Australia Pty. Ltd., the other offtake partner, has "experienced significant pandemic-related downturns in market demand [and] other challenges including the delayed commercialization of new products."

ACCC said the program's suspension created "significant concerns about existing stockpiles and how consumers can recycle soft plastics going forward."

The scheme had been running in nearly 2000 supermarket outlets across the country, with collection bins in Coles and Woolworths supermarkets and, since July this year, at Aldi.

The task force will initially be chaired by the Federal Department of Climate Change, Energy, the Environment and Water.