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ADDITIONAL LEGAL NOTE

On

  THE SETTING UP OF THE TEXTILE WASTE RECYCLING, RE-USE AND PROCESSING SYSTEM IN FRANCE

ANALYSE OF THE FRENCH DECREE PROJECT RELATING TO THE RECYCLING AND PROCESSING OF WASTE FROM CLOTHING TEXTILES PRODUCTS, SHOES OR HOUSEHOLD LINEN PURSUANT TO ARTICLE L.541-10-3 OF THE ENVIRONMENT CODE

 

For the attention of the Bureau of International Recycling (the BIR)

 

Law Firm HUGLO LEPAGE & Partners

References : 07033009

Confidential – Provisional version before clients’ approval

22nd September 2007

Mr. Francis Veys of the Bir asked Anaïs Berthier of Huglo-Lepage law firm, by e-mail dated 12th September, 2007, to provide the BIR legal assistance on the question of the conformity of the project of decree on the recycling and processing of waste from clothing textile products, shoes or household linen with articles of EC Treaty to which Matthieu Wemaëre refers in the note he realised for the BIR on this very subject on May 14th  2007.

This note aims therefore at completing Matthieu Wemaëre’s note in regard of the text of the decree project and of the specifications appended to the approval of the organisation issued pursuant to article L.541-10-3 of the Environment Code that Mr. Francis Veys sent to Anaïs Berthier and that Matthieu Wemaëre did not have at the time he realised the note.

I.                     Concerning the existence of a monopoly in favour of the approved organisation 

The question is whether the decree project creates a monopolistic situation in favour of the approved organisation in the meaning of article 82 of EC Treaty.

If certain members of the working group in charge of setting up the decree envisaged “a unique organisation” committed to the organisation of the recycling and the re-use and in charge of receiving contributions from its members, the text of the project allows a plurality of organisations eligible for approval.

The text of the decree is clear enough :

Title I is referred to as : “The approval of organisms pursuant to article L.541-10-3 of the environment code ».

Article 1 states that : « The organisms mentioned at article L.541-10-3 are (… ). Each organism created by the persons …».

Thus, it seems that the decree project allows the setting up of a plurality of organisms rather than creating a monopolistic situation.

The future system seems therefore to have similarities with the one of the Waste Electric and Electronic Equipments in which waste producers may choose the collective organisation they wish to join in order to conform to their obligations.

Besides, even if the setting up of a unique organisation was envisaged, in spite of the words of the text of the decree, there would not be a dominant position abuse which is a necessary criterion for the existence of a monopolistic situation in accordance with article 82 of EC Treaty, since the scale of the contributions which are due to the organisation is decided under the control of the public authorities  (CJCE, 1er July 2003, Société Sapod Audic contre Société Eco Emballages). Article 2  of the decree project provides indeed that :

« Le barème de la contribution est fixé sur la base du nombre d’unités vendues et/ou de la masse des produits vendus. Cette contribution peut être modulée en fonction de différences objectives de situation dans le traitement et le recyclage des déchets issus des produits concernés ainsi que pour les produits respectant les critères du label écologique mentionné par le règlement (CE) 1980/2000 du 17 juillet 2000 susvisé ou de tout autre système de labellisation écologique.

Les organismes agrées informent au préalable les ministères chargés de l’écologie et de l’industrie de tout changement de barème de contribution et rendent public ce nouveau barème deux mois au moins avant son entrée en vigueur ».

Therefore, the scale of the contributions are determined pursuant to a calculating method fixed by the decree and thus by the public authorities. Moreover, the approved organisations must inform the concerned ministries prior any change of the scale.

It can be logically concluded from what precedes that the decree project does not create a monopolistic situation, in the meaning of article 82 of EC Treaty, in favour of the approved organisation.

II.                  Concerning the confinement of the recycling operations on the French territory and the waste exports restriction

The obligation for the approved organisations to attain a precise objective regarding the social integration induces a confinement of the recycling operations on the French territory and a restriction of the waste exports. The extent to which the recycling operations will have to be realised on the French territory will however depend upon the social integration objectives imposed

Article 5 of the decree project only provides for that specifications appended to the approval of an organisation sets :

« les objectifs d’insertion des personnes rencontrant des difficultés au regard de l’emploi au sens de l’article L.541-10-3 du code de l’environnement que respecte l’organisme titulaire de l’agrément ou de l’approbation. Ces objectifs, exprimés en volume d’heures de travail ou de formation réalisées par ces personnes dans le cadre des conventions conclues avec des opérateurs de tri, sont fixés pour chaque année de la durée de l’agrément ou de l’approbation en fonction du tonnage supplémentaire par rapport à l’année précédente de déchets mentionnés à l’article L.541-10-3 du code de l’environnement et triés. »

Yet, the paragraph «integration objectives » (chapter 1. 4°b)) of the specifications appended to the approval of the organisation is blank and remains to be completed.

Furthermore, the version of the decree project which has been transmitted to the Commission does not modify the recycling operations conditions on the French territory set by the decree project analysed by Matthieu Wemaëre. The same conclusions can therefore be drawn.

It seems that the decree project should be considered as contrary to articles 29 and 30 of EC Treaty,  that is to say contrary to the prohibition of quantitative restrictions on exports or measures having equivalent effects. It must also be considered as contrary to article 49 of EC Treaty which guarantees the freedom to provide services.

However, this interpretation is, of course, subject to the sovereign discretion of the Court since the French State could invoke the objective of social integration of people experiencing employment difficulties thanks to the waste recycling and re-use industry as an imperative requirement of general interest.

In order for that argument to be accepted by the Court, the measure should however be proportionate and, in addition, the State should demonstrate that it could not adopt a measure as protective but less restrictive. The lack of precise numbered integration objectives that shall be attained by the approved organisation make it impossible to draw a conclusion on the proportionality of the measure.

No final conclusion can thus be drawn at this stage.

 

III.                Concerning the breach of the principle of equality between companies having social activities and other companies

The determination of a breach of the principle of equality between companies aiming at social activities and other companies depend upon the disproportionate character of the difference of treatment just as for the qualification of a breach of the freedom to provide services principle provided for by article 49 of EC Treaty.

 

There again, in order to qualify the difference of treatment as disproportionate, it is necessary to know the precise integration objectives that the approved organisation shall have to attain. As we have pointed out earlier in this note, the specifications appended to the approval of the organisation does not provide those objectives.

 

It is therefore impossible at this stage to determine whether a real discrimination exist in favour of the companies aiming at social activities. It is thus necessary to obtain more information on the extent to which the realisation of the recycling operations will be reserved for the companies aiming at social activities.

 

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