The OFT has published provisional recommendations to improve competition and efficiency in the market for organic waste treatment. On the request of (the water services regulator) it carried out a market study into market barriers in the treatment of all types of organic waste in England and Wales, including waste from agricultural and food and drink sources.
The market study uncovered limited competition between the regulated water and sewerage companies themselves, and also between them and other businesses, to treat organic waste. Whilst acknowledging that the nature of the market limits the scope for competition, the OFT found that aspects of economic, environmental and planning regulation could be changed to foster competition. The OFT has therefore provisionally decided that appropriate remedies lie in action by OFWAT and other government departments, rather than in a reference to the Competition Commission for an in-depth market review. The OFT considers that, to be effective, the remedies need to be implemented as a package, with the key part being OFWAT tackling the economic regulation concerns.
Interestingly, the OFT was also critical of an apparent corporate culture of risk aversion and over-reliance on guidance in the water sector which has resulted in a reluctance to treat significant volumes of organic waste. However, it considers that the market study process, together with the reform of the economic regulation regime, should address this. Interested parties wanting to respond to the OFT on its findings can do so until 27 October 2011.