End in sight for Germany's deposit system

The EU decision follow's the Bundesrat's decision last week to clarify the deposit regulations, and makes the installation of a national return system more likely.

Rexam, the world's biggest beverage can maker, certainly believes that the preconditions for a national return system for one-way beverage packaging in Germany are now the most positive they have been since the introduction of the deposit on one-way beverage packaging in January 2003.

"This is another piece of encouraging news for one-way beverage packaging in Germany,"​ said Lars Emilson, Rexam's newly appointed chief executive.

"The EU will be expecting Germany to move purposefully towards a nationwide return system, as opposed to the patchwork of non-compatible systems that exists at the moment, which effectively act as a barrier to the free movement of beverages."​

The European Commission decided to refer Germany to the European Court of Justice because it believes that the way in which the deposit and return systems function in Germany constitutes a disproportionate barrier to the free movement of packaged beverages from other Member States, in breach of the Treaty's rules on free movement of goods.

"The Commission has taken a decision of principle to refer Germany to the Court because this is a very serious infringement,"​ said internal market commissioner Frits Bolkestein.

"However, we have given Germany a three month opportunity to meet our concerns before the decision is executed, because we recognise the considerable efforts undertaken by the German authorities in recent weeks to redress the situation."​

According to the 1998 German Packaging Law a mandatory deposit of 25 or 50 cents (depending on the size of the packaging) has to be levied on one-way beverage containers if the market share of reusable beverage packaging is consistently below a threshold of 72 per cent.

On 1 January 2003 the mandatory deposit was introduced for mineral waters, beer and carbonated soft drinks. And on 22 September 2004, the German government decided to extend the mandatory deposit to fruit juices and non-carbonated soft drinks.

The existing deposit and return rules only oblige retailers to take back used one-way packaging of the same type, shape and size as the packaging of drink products that the retailers carry in their product range. This allows retailers to refuse to take back all other drinks packaging. As a consequence, consumers cannot return used one-way beverage packages to any point of sale of their choice.

As a result, instead of a nationwide return system, Germany now has various non-compatible return systems that cover only part of the total market. In addition, many products packaged in one-way containers have been removed from the shelves of most shops.

This, claims the EU Commission, has limited the freedom of choice of German consumers, increased manufacturing costs and drastically reduced the import of beer, mineral water and soft drinks in one-way packaging from other EU Member States. Some 95 per cent of imported drinks are in 'one way' packaging.

Packaging firms have been calling for the abandonment of the scheme ever since its implementation. A recent study carried out by Europen, the European Organisation for Packaging and the Environment, argued that the deposits have not brought environmental benefits and resulted in an overall net loss of 9,530 jobs in 2004 alone.

Rexam lost 1.5 billion cans in Germany last year and saw £18 million shaved off its profits as a direct result of the scheme, and some factories in the UK and Sweden have had to close due to the collapse of demand for non-refillable beverage containers.

The packaging industry is also confident that it has consumers on its side. The Association of European Steel Producers (APEAL) for example claims that the majority of Germans want to see the one-way can deposit system scrapped. Over 75 per cent of consumers feel that one-way drinks packaging should be sorted for recycling at home, as was done until the end of 2002.