German Can Deposit Saga Incurs EU’s Wrath

The on-going saga that is Germany’s can and bottle deposit system took another embarrassing turn on Wednesday when the president of the European Commission, Romano Prodi, reportedly called on Gerhard Schröder’s government to sort out the messy situation.

An article published in the mass circulation tabloid Bild reported that Prodi had issued an ultimatum to the German chancellor to bring the chaos to an end. In a letter to Schröder, Prodi threatened Germany with a “contractual violation procedure” should the planned October 1 launch of the permanent network of deposit machines not come into existence. The EC president also demanded that the current compulsory deposit on single-use packaging be suspended until the final system is up and running.

A government spokesman on Wednesday said the letter Bild referred to was had been sent to Berlin last month. "We're on the same page as Brussels," said the spokesman. "An extension of the temporary rules is out of the question."

It is not the first time the EC has spoken out about the situation in Germany regarding the deposit system but the severity of the tone and the personal intervention of Romano Prodi take the disagreement to a more serious level.

EC claimed system unfair to foreign businesses

In July, the European Commission claimed that the interim arrangement for handling the deposit, which came into force at the start of the year, could conflict with EU laws on free movement of goods. Claiming that the system had drastically reduced sales of beverages in recyclable containers, EC Internal Market Commissioner Frits Bolkestein said at the time that he believed the present system in Germany put foreign filling companies at a disadvantage.

Germany’s Environment Ministry spokesman Michael Schrören defended the system in a statement: “There are no signs that imported products are disadvantaged by the current interim deposit rule. On the contrary, 15 percent more foreign mineral water than before has been sold since the introduction of the deposit.” German environment minister Jürgen Trittin also sent a letter to the EC asking for proof that French mineral water suppliers had seen lower export sales due to the deposit.

However, despite the exchange of words, Trittin told the German news agency DPA soon after: “There is no conflict between the federal government and the EU Commission.”

The EU threatened to take legal action against Germany as recently as last month but then changed its mind, demanding only that the system due to be introduced in October be replaced by an EU approved alternative.

Plagued with problems at home

On a national level, the nationwide interim deposit system for cans and plastic bottles has been plagued by problems since its introduction in January but none has been more damaging than the German beverage industry’s decision to suspend the expensive operation in July. The industry claimed that there wasn’t a proper legal framework to justify the investment of billions of euros, which caused an angry response from Trittin who told the industry that it must stand by its promise to adhere to the recycling law.

Speaking at the time of the decision, Peter Traumann, chairman of the German Food Industry Association, said in a statement, “In our estimation, over the past five months the mandatory deposit on single-use drink containers has caused dramatic market distortions leading to existential dangers for firms and jobs. We’re afraid this trend will continue if conditions don’t change.”

Plan to simplify recycling backfires

The deposit system or “Dosenpfand” was supposed to simplify the recycling of non-refillable containers by charging consumers a 25-cent (29 U.S. cents) deposit on almost all single-use cans and bottles, encouraging them to return the empties to the place of purchase in order to get their money back.

Government hopes that the system would increase recycling have been dashed by complaints from the business community and consumers who say the scheme is inconvenient and excessively costly to retailers and bottlers.

The interim deposit system was expected to be replaced on October 1 by the permanent network of collection machines. However, the Environment Ministry will have to restart negotiations with the beverage industry in an attempt to resurrect the system if it is not to incur more wrath from the European Commission and possible legal action.