High Court of Ireland Decisions

1. This is an application brought by the Plaintiff for Interlocutory relief in which it seeks firstly, an injunction restraining the Defendant, its servants or agents from refusing the Plaintiff company access to the landfill site at Silliot Hill, County Kildare, which is owned and operated by the Defendant in these proceedings and, secondly, an injunction restraining the Defendant, its servants or agents from abusing its dominant position in the market for refuse collection services in the County of Kildare.

The Plaintiff is a limited liability company having its registered office in Dundalk, incorporated in 1989 and which has been trading since 1989. It has approximately 32 employees and is engaged in the business of refuse collection. The Defendant, Kildare County Council, is sued in its capacity as local authority for the County of Kildare and in that regard it is involved in the collection of refuse in County Kildare itself.

The Plaintiff has been involved in the market for refuse collection in County Kildare since 1989. The Defendant has also been involved in the collection of refuse during the same period of time. The Plaintiffs case is that the major competitors in the market for refuse collection for the County of Kildare are the Defendant, Padraic Thornton, O'Hagan Brothers, Ray Whelan, Irwin Cobb, Andy Phibbs and Kevin Flood. Each of these is engaged in the provision of refuse collection and waste disposal services to householders and commercial businesses. The Plaintiff claims that the Defendant is competing with private sector companies for the supply of refuse collection services to the general public. The Defendant uses two of the contractors mentioned, that is O'Hagan Brothers and Ray Whelan, as sub-contractors to carry out refuse collection on its behalf, O'Hagan Brothers in the North of County Kildare and Ray Whelan with responsibility for South Kildare. These two contractors also compete with other competitors including the Plaintiff.

There are 39,000 houses in the County of Kildare and within County Kildare there are approximately 5,000 in Naas and 2,000 in Athy where there are separate Urban District Councils in which Kildare County Council is involved in the collection of the refuse. This means that outside of the area of the two Urban District Councils in questions there are approximately 32,000 houses. The Plaintiff is involved in collecting refuse from approximately 3,000 of these houses, that is approximately 9.40/0 of the market. As against this the Plaintiff claims that the Defendant is involved in collecting refuse from approximately 15,000 houses in the area which represents almost 46.8% of the market for refuse collection in the County of Kildare.

The Plaintiff contends that in this application the Court should assess the application on three bases, first of all that there is a serious issue to be tried between the parties, secondly that damages are not an adequate remedy for the Plaintiff and thirdly that the balance of convenience favours the granting of the interlocutory relief sought against the Defendant.

The Plaintiffs case is that the landfill site at Silliot Hill, County Kildare is all important to it because it must dispose of its waste there. This is the waste which is collected in County Kildare. In general other local authorities will not accept waste from other counties, thus the Plaintiff contends that all waste collected in County Kildare must be disposed of in the landfill site in County Kildare. The subject site is the only landfill site in the entire County of Kildare and this is controlled by Kildare County Council.

The Plaintiff contends that because the Defendant has control of this landfill site it has complete freedom to set the price for the use of the landfill site and indeed to set all conditions governing the use of the said site.

THE BACKGROUND

In or about May or June of this year the Defendant called a meeting of all contractors to its offices and indicated that there was a problem in relation to the future capacity of the subject site at Silliot Hill. The Defendant told all the contractors that there was only some 100,000 tonnes of capacity left in Silliot Hill before it was completely full. On the current usage of Silliot Hill by all contractors, including the County Council, the Plaintiff estimates that there is approximately twelve months left before Silliot Hill is completely full. The Plaintiff collects approximately 180 tonnes per week from all of its customers which are both commercial and domestic. At the meeting in May or June of 1999 the County Council stated to the Plaintiff Company that it regarded 15% of the Plaintiff's waste as commercial and that such waste should be excluded from Silliot Hill in the future.

The Plaintiff states that it collects refuse from all of its customers both domestic and commercial and that it makes little sense, from a commercial point of view, to be collecting refuse on a particular road which would contain both domestic households and commercial premises and to distinguish between the waste of a domestic household and commercial premises. It therefore contends that to differentiate, as the Defendant seeks to do, between the commercial and domestic waste and to indicate that the Plaintiff can only deposit its domestic waste in Silliot Hill is commercially and practically unworkable. At the meeting in May or June of 1999 Kildare County Council indicated the nature of the problem to the various contractors and also invited proposals from them. The County Council at this time indicated that because Silliot Hill was about to become full it was seeking other methods of disposal of waste. It stated that it was in negotiations with South Dublin County Council with a view to disposing of its waste with South Dublin County Council at Ballymount in South County Dublin.

On the 23 September, 1999 the Defendant indicated in writing to the Plaintiff that it intended to limit the capacity of refuse received from the Plaintiff at its Silliot Hill dump to 150 tonnes per week, representing a 15% reduction on its normal average weekly tonnage to then, which was deemed by the Defendant to be amount referable to the Plaintiffs commercial refuse collection. The Plaintiff contends that the decision of the County Council imposes a major problem for it insofar as:

(a) it has entered into a contract with its customers to collect their refuse on a weekly basis and claims that it is contractually obliged to collect the refuse of its customers on a weekly basis.

(b) to date the contractual commitments of the Plaintiff amount to 180 tonnes on average per week and all of this refuse is deposited at the landfill site in Silliot Hill which, as stated previously, is the only landfill site in County Kildare.

(c) it is simply impractical and unworkable for the Defendant to state to the Plaintiff that it must reduce its amount of refuse collection per week from 180 tonnes to 150 tonnes as the Plaintiff is unable to dispose of the remaining 30 tonnes of refuse in any other place in the County of Kildare or indeed outside of this county.

(d) the Plaintiff will be unable to perform its contractual obligations to its clients and collect their waste and deposit it at Silliot Hill.

(e) it is not in a position to deposit the waste at any other landfill site in adjacent counties because such counties do not accept waste from neighbouring counties.

(f) Insofar as the Plaintiff does not collect the waste from its customers then such waste will be left there and will clearly constitute a health hazard in the area.

The Plaintiff complains that the Defendant is not imposing any similar restriction in relation to its own vehicles or on sub-contractors employed by it in the collection of refuse on its behalf and in this regard the Defendant is unfairly discriminating in favour of itself in the business in question. The Plaintiffs contention is that the Defendant is in a dominant position in the market which it identifies as a market for refuse collection in the geographical area of the County of Kildare. The Plaintiff further contends that the Defendant County Council is guilty of abusing its dominant position in this market in breach of the provisions of Section 5 of the Competition Act, 1991.

With regard to the issue whether the Defendant is in breach of the Competition Act, 1991 as being an undertaking which is abusing its dominant position, the issue arises in these proceedings as to whether it is in fact an undertaking within the meaning of the Competition Act, 1991. The Plaintiff contends that one of the important features of the market in question is that customers are very reluctant to switch from one competitor to another and if a customer is lost to a company such as the Plaintiff then it remains lost for a considerable period of time and it is very difficult to recover such customers. The Plaintiff contends that the relevant charges which must be considered by any company such as the Plaintiff in refuse collection business in setting the rate for the service charges are as follows:-

(a) Labour costs.

(b) Costs of lorries.

(c) Costs of wheel bins.

(d) Insurance.

(e) Diesel and maintenance.

(f) Advertising and marketing.

(g) Administration charges.

(h) Landfill charges.

(i) VAT.

(j) Profit margin.

The Plaintiff contends that the landfill site charges are one of the key components in establishing the price for refuse collection services because landfill charges are one of the most expensive overheads which the business has to absorb. The Plaintiff contends that the Defendant does not charge any landfill site charge in its computation of the charge it imposes on its customers and thereby enjoys a competitive advantage in competing with the Plaintiff and others and that this is an unfair advantage. This matter is disputed by the Defendant.

The Plaintiff further contends that if is shut out from the landfill site it will have very serious consequences for the Plaintiffs business. If it is unable to use the landfill site it will be unable to collect refuse from its customers. It contends that this would represent a public health hazard in respect of uncollected refuse. Furthermore, the Plaintiff contends that if the Defendant Council or any of its other competitors were to collect this refuse from the Plaintiffs own customers, the Plaintiff would suffer a very serious loss of credibility amongst its customers because of its inability to collect their refuse. The Plaintiff further contends that there is a strong likelihood that it would lose many customers to other competitors without being able to recapture them. It contends that this in turn would considerably increase the financial pressure on the Plaintiff and would lead to further losses in this market. The Plaintiff claims that it would suffer serious damage to its business and reputation in the market place.

On behalf of the Defendant the case is made that it is obliged by statute, namely, the Waste Management Act, 1996 ("the 1996 Act") to collect and arrange for the collection of all household waste in the County of Kildare excluding the urban areas of Naas and Athy and to provide and operate facilities as may be necessary for the recovery and disposal of such waste and to do so unless the estimated cost -of the collection of this waste would, in the Defendant's opinion, be unreasonably high, or where there is an adequate service waste collection available in the area concerned, or where adequate arrangements for the disposal of the waste concerned can reasonably be made by the holder of the waste in question. With regard to the charge of £22.00 per tonne to dispose of waste at the Defendant's dump at Silliot Hill, the Defendant's case is that this charge is based on the cost to the Defendant of operating and monitoring the said site in accordance with the requirements of the 1996 Act. The Defendant states that there are 33,000 households available for service in the area covered by it of which it claims to service approximately 17,500 or 53%.

The Defendant points out that until 1998 the landfill site at Silliot Hill has been accepting all of the domestic waste as well as most of the commercial and industrial waste for the County of Kildare. It is stated that in 1998 the rate at which the said waste was being received at this landfill site was approximately 100,000 tonnes per annum. During 1998 it became apparent to the Defendant that if waste was not diverted from the said landfill site as a matter of urgency that the capacity of this site would be exhausted in a matter of months. At that time it was estimated that, at the then current rate of fill, all of the void space at the site would be used up by December 1999 or January 2000 at the latest. Because of the difficulty faced by the local authority and its inability to locate alternative landfill sites for the diversion of its waste and by reason of its obligations under the 1996 Act to provide a landfill site for the disposal of domestic as opposed to commercial waste, it decided to refuse commercial and industrial waste at the landfill site at Silliot Hill from the 1 September, 1999.

It is stated that on the 1 September, 1999 there was approximately 70,000 tonnes of void space remaining at the landfill site and it was then realised that the refusal of commercial and industrial waste at the site would reduce the intake into the site to approximately 70,000 tonnes per annum and this would ensure that the site could take domestic waste until the 1 September, 2000. Subsequently on the 17 September, 1999 agreement was reached in principle with South Dublin County Council for the diversion of a minimum of 25,000 tonnes of domestic or household waste per annum to the bailing station at Ballymount from where the refuse would be disposed at the landfill site at Kill in the County of Kildare. The Defendant Council is now in a position to arrange for the diversion of its municipal waste to the Ballymount bailing station and it has so informed the Plaintiff by letter of the 6 October, 1999.

The Defendant points out that the landfill site at Silliot Hill is the only disposal site available to it for the disposal of sewage sludge for the County of Kildare and that it is not possible for it to make alternative arrangements for the disposal of this sewage sludge from its treatment plants at Leixlip and Osberstown. The Defendant points out that it is obliged by statute to dispose of such sewage sludge and must remain in a position to do so for at least eighteen months when the upgrading of its sewage treatment plants is due to be completed. These treatment plants produce approximately 9,000 tonnes of sewage sludge per annum and in disposing of this sludge at the landfill site the Defendant requires 14,000 tonnes of municipal waste to cover the said sewage sludge which is odorous. The sewage sludge must be buried in municipal waste. In this way the sewage sludge is contained and there is a huge reduction in odour and other nuisances. The Defendant contends that it is essential for this reason that 14,000 tonnes of municipal waste continues to be disposed of at Silliot Hill.

Because of the limited capacity at Silliot Hill it is proposed by the Defendant to make provision for the diversion of all waste from the North Kildare area to Ballymount bailing station, including that of the Plaintiff and the Defendant, and to continue to receive waste from South Kildare, including that from the Athy UDC area and what is referred to as 'car bunker waste' and the sewage sludge at the landfill site at Silliot Hill. The Defendant contends that it has complied with its statutory obligations to the Plaintiff in providing an alternative disposal site for the disposal of domestic waste by the Plaintiff at the Ballymount bailing plant and that once such alternative provision has been made by the Defendant for the Plaintiff that the Plaintiff is not entitled as of right to dispose of its waste at Silliot Hill. The Defendant contends that if it is obliged to continue to receive the Plaintiffs waste at Silliot Hill that it will suffer irreparable harm in that it will be frustrated in its efforts to provide for the disposal of sewage sludge during the forthcoming eighteen months until the sewage treatments plants have been upgraded and that the Defendant will thereby be left in a position where it would not be possible for it to comply with its statutory obligation for the disposal of the sewage sludge. It is further pointed out that this sewage sludge will not be accepted by any other local authority at its landfill sites.

The Plaintiff points out that it collects domestic, commercial and industrial waste all at the same time and that it is not possible for it to separate out its domestic from its commercial and industrial waste. The Plaintiff contends further that the Defendant is being completely selective in choosing South Kildare as being the only part of Kildare which will be permitted to dispose of waste at Silliot Hill in the future. In addition, the Plaintiff contends that the capacity crisis at Silliot Hill is entirely self-inflicted and is due to mismanagement and lack of forward planning on the part of the Defendant Council. The Plaintiff states that there are very significant extra costs and huge commercial difficulties involved in disposing of waste at Ballymount bailing plant. In this regard it indicates that two extra trucks will be necessary because of transport traffic delays and restricted entry times. It is stated that this in turn will result in poor service being delivered by the Plaintiff to its customers and will lead to an erosion of its reputation and its good will in the market place.

It is pointed out by the Plaintiff that it has now purchased a site for disposal of waste. This may require planning permission.

THE ISSUES TO BE TRIED.

Among the issues which remain to be tried in the plenary action herein are, firstly, whether the Defendant constitutes an undertaking for the purposes of the Competition Act, 1991 and, secondly, whether it is in a dominant position in trade for any goods or services in the State or in a substantial part of the State. Assuming that it is an undertaking for the purposes of the Competition Act and that it is in a dominant position in trade for the services in question in a substantial part of the State, it will remain to be ascertained whether it is guilty of any abuse of the dominant position alleged. With regard to abuse of the dominant position, it is alleged that the Defendant is engaged in unfair pricing structures and that it is also engaged in preferential trading and discrimination in favour of its own trade as against that of the Plaintiff. In this regard it is alleged that the trading practices complained of fall within the instances of abuse set forth in Section 5(2) of the Competition Act, 1991.

With regard to the question whether the Defendant constitutes an undertaking for the purposes of the Competition Act, 1991, the Plaintiff relies upon the decision of the Supreme Court in the case of Deane v The Voluntary Health Insurance Board [1992] IR 319, Decision No 7 of the Competition Authority Waterford Harbour Commissioners/Bell Lines Ltd and Decision No 288 of the Competition Authority University College Dublin! The Governor and Company of the Bank Of Ireland In this regard it contends that the Defendant is engaged in trade for gain insofar as it is engaged in the provision of services in return for a charge or payment. The Defendant relies on the decision of the Court of Justice of the European Communities in Case 30/87 entitled Bodson v Pompes Funebres des Regions Liberees SA ECR 2479, in which the Court of Justice indicated that Article 85 of the Treaty did not apply to contracts for concessions concluded between communes acting in their capacity as public authorities and undertakings entrusted with the operation of a public service. In light of this decision an issue must be tried as to whether the Defendant does constitute an undertaking for the purposes of the Competition Act, 1991. Secondly, a fair issue remains whether the trade in question is in a substantial part of the State and, thirdly, whether the Defendant's conduct does in fact constitute an abuse of any dominant position which it may hold. The Plaintiff contends that the relevant product market is refuse collection, as a whole and the relevant geographical market is the county of Kildare or the county of Kildare less the areas of Athy and Naas Urban District Councils. The Plaintiff contends that the Defendant fulfils the definition of dominance in the market in question as defined by the Court of Justice of the European Communities in several cases including Case 322/82 Michelin ECR 3461; [1985] 1 CMLR 282.

With regard to the abuse of the dominant position alleged, the Plaintiffs contention includes an assertion that the measure adopted by the defendant is out of proportion to the threat perceived by it and that it is guilty of exclusionary or exploitative abuse, and that it is guilty of unfair discrimination.

The Plaintiff relies upon Donovan v Electricity Supply Board [1994] 2 IR 305 in support of the case that the abuse of dominance in the instant case may exist even if unintentional and that the decisions of the Court of Justice of the European Communities and of the Commission should be considered persuasive in construing the provisions of the Competition Act, 1991.

This Court is satisfied that the requirement placed on the Defendant to deposit its waste elsewhere that at the Silliot Hill site will result in increased costs to the Plaintiff Company and that these costs will be in excess of those presently pertaining at the Silliot Hill site. All subcontractors will have to go to Ballymount with the exception of one subcontractor in South Kildare. In this regard it is alleged that the Defendant is accepting refuse at Silliot Hill from its own subcontractor but not from the Plaintiff company. The Plaintiff contends that there is sufficient capacity at Silliot Hill to accommodate its waste at least for the period up to September 2000. It contend that the Defendant could send its own waste to Ballymount and permit the Plaintiff and others to go to Silliot Hill. At the same time the Plaintiff accepts that the Defendant must retain capacity at Silliot Hill to accommodate sewage waste there, The Plaintiff contends that damages are not an adequate remedy and it highlights the logistical problems associated with the removal of refuse to Ballymount. It reiterates its claim that its commercial and domestic or household waste is inextricably linked and cannot be segregated.

It is clear that the Defendant is seeking to ameliorate some of the difficulties that will result if the present proposal relating to the disposal of the waste at Ballymount is put in place and that for that reason it has postponed the coming into effect of that decision while making efforts to address some of these problems. Accordingly one months notice will be given before the transfer to Ballymount is put into effect.

The Defendant points out that it current charge of £22 per tonne will increase to £46 per tonne on the 1 January 2000. The charge at Ballymount will be £45 per tonne but it accepted that there will be increased transport costs associated with the disposal of waste there. The Defendant relies upon the fact that, while it is enjoined by statute to collect and dispose of household waste, it is granted a discretion to collect or arrange for the collection and disposal of other waste. The Defendant contends that damages are an adequate remedy if the Plaintiff should succeed in the action and it claims further that the balance of convenience lies against the granting of interlocutory relief sought. The Defendant contends that its actions are justified by objective considerations relating to public health and waste management and it denies that it is directed to or in fact gives a competitive advantage to itself or its subcontractors over the Plaintiff. The one subcontractor delivering to Silliot Hill would have a 100 mile round trip if it was forced to deliver its waste to Ballymount.

As against the Plaintiff's claim relating to the balance of convenience, the Defendant states that because of the sewage sludge problem, were the Plaintiff to be granted the interlocutory relief sought but ultimately lose the action the Defendant could not be compensated for in damages. It claims that it must be entitled to manage its site at Silliot Hill and that it may take more than 10 months before a hearing of this action and that having regard to the urgency of the matter that the status quo cannot be maintained and that the relief sought by the Plaintiff should be refused.

CONCLUSION

The Court has reflected upon the submissions made and is satisfied that there is a fair issue to be tried. However, with regard to the refusal of access to the Plaintiff to the Silliot Hill site in circumstances where the Defendant Council will accommodate the Plaintiffs domestic or household waste elsewhere, the Court is satisfied that if it is demonstrated at the hearing of the action herein that the refusal of the access to Silliot Hill for this waste is in breach of the Competition Act, 1991 the plaintiff will be adequately compensated in damages. Furthermore, because of the very limited lifespan of the site at Silliot Hill the Court is satisfied that the balance of convenience lies in favour of the Defendant and that the Court should refuse the injunctive relief sought by the Plaintiff. While this may prove more costly for the Plaintiff it will be in the same position as other operators who compete against it in the North Kildare area and who will be required to dispose of their household waste at Ballymount. If this Court were to grant the relief sought by the Plaintiff it would have the additional effect of distorting competition in the North Kildare area such that the Defendant could not resist similar relief being sought by other operators competing with the Plaintiff who will have to deliver their refuse to Ballymount. In such a situation the Defendant would not be able to accommodate the sewage sludge at Silliot Hill for the period of 18 months which is required.