Australia's antitrust regulator, the Australian Competition & Consumer Commission, has proposed granting the nation's three major supermarket chains a year to resolve post-consumer soft plastic recycling.
In November 2022, the ACCC granted conditional interim authorization to the Coles, Woolworths and Aldi chains to solve the problem after the only post-consumer collection company, REDcycle, initially suspended its return-to-store soft plastics recycling program.
REDcycle used about 2,000 collection bins stationed within the supermarkets to collect "scrunchable" soft plastic, usually high density polyethylene, low density PE and polypropylene products, including shopping bags, cling wrap, bubble wrap and food packaging.
Melbourne-based RG Programs & Services Pty. Ltd., which trades as Red Group, established REDcycle in 2011 and initially got the support of Coles and Woolworths supermarket chains. It added Aldi stores as collection points in July 2022.
After the program was "temporarily suspended" last November, it was discovered REDcycle had stockpiled 12,400 tons of plastic it could not recycle in 32 warehouses across three states.
That prompted angry social media responses from consumers complaining about their inability to recycle soft plastics and many felt misled because they were unaware so much plastic was being warehoused not recycled.
Until the program's demise, REDcycle had delivered the plastic to recycling facilities to process into new recycled plastic products.
Elizabeth Kasell, 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.
Together the chains established a soft plastics task force, which released a Roadmap to Restart plan in March that outlined ways to manage the stockpile and potentially resume collections.
ACCC said in a statement it plans to grant authorization with conditions for 12 months to enable the major supermarkets to "continue collaborating on a short-term solution to manage the soft plastics stockpile and facilitate resumption of in-store collections for recycling."
Australian legislation requires a public consultation process on the draft determination which ACCC said will start "shortly."
ACCC Deputy Chair Mick Keogh said: "The REDcycle liquidation has provoked a lot of community concern and this proposed authorization will allow the supermarkets to develop and implement a solution to potentially address the environmental risk of the existing stockpile of soft plastics and future waste."
Government environment protection authorities in two states had declared the warehouses a fire hazard and said the stored plastic would need to go to landfill.
The task force's road map report said Coles and Woolworths had agreed to "assume responsibility" for REDcycle's legacy stockpiles to give the community confidence the materials will be stored safely.
While "every effort" will be made to stop the plastic going to landfill it was likely "a proportion may need to be landfilled due to degradation of the material in storage."
The task force said the size of the stockpiles would "inundate the domestic reprocessing market" for about a year if it was all processed in Australia, thus delaying resumption of in-store collections.
The task force was "in discussions with leading international industrial companies with advanced mechanical or chemical recycling plants offshore that are capable of accepting the stockpiled material for reprocessing into food-grade plastic."
The task force gave no time frame for resuming in-store collections, but listed conditions that had to be met before that could happen. It said there would be a staged resumption "by geographic area, aligning collection volumes with viable local reprocessing capacity."
Keogh said ACCC was only proposing a 12-month extension to its interim approval so the chains would have to reapply for authorization for any longer-term solutions.
ACCC must be satisfied the likely public benefit from the supermarkets' conduct outweighs any likely public detriment.
REDcycle's largest volume offtake partner, Close the Loop Ltd., a publicly listed, Melbourne-based recycler, had a major fire in June 2022 at its TonerPlas facility, which makes an asphalt additive. Close the Loop's website says the TonerPlas line will be back in full production by July 2023, after which it will "require large volumes of soft plastic" to manufacture TonerPlas and its recycled plastic injection-molding resin rFlex.
Jeff Angel, director of the Sydney-based Boomerang Alliance, a group of 56 environmental groups, said the task force's roadmap report was "timid."
He urged governments to mandate a product stewardship scheme, to be imposed on the packaging sector to ensure it can meet four targets set by an industry body called the Australian Packaging Covenant Organisation. They are that by 2025:
• 100 percent of packaging be reusable, recyclable or compostable
• 70 percent of plastic packaging be recycled or composted.
• 50 percent average recycled content be included in packaging.
• All "unnecessary" single-use plastic packaging be phased out.