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Commission reaches preliminary view to authorise Nelson and Tasman Councils’ joint landfill application

17 March 2017

The Commerce Commission has reached a preliminary view that, subject to a condition, it should allow the Nelson City Council and the Tasman District Council to form a business unit to jointly operate the two landfills in the Nelson-Tasman region.

At present, each Council owns and operates separate landfills. The two Councils have asked for authorisation to establish a Regional Landfill Business Unit (RLBU) that would be responsible for managing and operating both landfills. The Councils would close Tasman’s Eves Valley landfill and all of the region’s solid waste would be sent to Nelson’s York Valley landfill. Then, when the York Valley landfill reaches capacity, the two Councils would share the costs of reopening and redeveloping the Eves Valley landfill.

The two landfills are located relatively close to one another, and each currently competes with the other for solid waste. The proposed RLBU would remove this competition. The Commission considers that there would be a real chance that the removal of this competition would result in a net public detriment.

However, the Commission has reached a preliminary view that it will authorise the RLBU subject to a condition that the Councils will only use profits generated by the RLBU to fund waste related activities and services. The Councils have submitted that this is their current policy. However, the condition would ensure that these policies remain in place under the RLBU, removing the Councils’ incentive to increase landfill prices as a result of the proposed arrangement.

Interested parties are welcome to make submissions on the draft determination. Submissions are due by 31 March 2017 and can be sent to registrar@comcom.govt.nz, with the reference “Nelson-Tasman Landfills” in the subject line of the email.

A copy of the draft determination can be found here.

Background

The parties and the proposed arrangement

The Nelson City Council’s York Valley landfill is located in Bishopdale, Nelson. The Tasman District Council’s Eves Valley landfill is located relatively close by on Eves Valley Road, west of Richmond.

Each Council would continue to own its respective landfill under the proposed arrangement. However, from July 2017 the Eves Valley landfill would be closed, with all rubbish in the Nelson-Tasman region being sent to the York Valley landfill. Sometime after 2030, the York Valley landfill would be closed and all rubbish in the region would be sent to a redeveloped Eves Valley landfill.

The proposed RLBU would comprise representatives from both Councils, and would be responsible for setting landfill disposal fees and charges. The Councils would, however, retain oversight of landfill fees through the approval of annual plans. The ownership and authorisation of the Councils’ transfer stations and resource recovery centres will be unaffected by the proposed arrangement.

Authorisation requirements

The Commission may grant authorisation under section 58 of the Commerce Act for certain agreements that may otherwise breach the Commerce Act, if it is satisfied that the public benefits of the agreements outweigh the detriments arising from the loss of competition. The granting of a restrictive trade practice authorisation protects the applicant from court action under the Commerce Act by the Commission and private individuals.

Under section 62(1) of the Commerce Act, the Commission must prepare a draft decision before determining an application for authorisation of an agreement. The draft decision sets out the Commission’s preliminary view on whether or not we are likely to grant an authorisation, and the reasons for that view.

Under section 61(2) of the Commerce Act, when considering restrictive trade practice authorisation applications, the Commission is able to impose conditions on the applicant in order to address competition concerns.