The Office of Fair Trading has today issued recommendations designed to encourage increased competition and greater efficiency in the treatment of organic waste. The OFT launched the market study to examine advanced treatment of organic waste in January 2011 at the request of water regulator Ofwat.

The aim of the study was to understand whether the market for organic waste treatment services in England and Wales, in particular the sewage sludge treatment sector, is working well and, if not, what might be done to improve it.

The study has important implications for UK sewerage companies, who are increasingly using their anaerobic digestion facilities to generate renewable energy from sewage sludge and other organic waste.

Organic waste now of "strategic significance" to UK

Most organic waste in the UK is from agricultural sources, such as slurries and manure (around 90 million tonnes), around 16 million tonnes is food and drink waste (both from domestic sources and from industrial and commercial sources), with sewage sludge accounting for one to two million tonnes. The sector is of strategic significance to the country, given its role in relation to a number of sustainability objectives, including those related to the efficient use of waste and the production of renewable energy.

The OFT has provisionally decided that a market investigation reference to the Competition Commission would not be appropriate at this time. The OFT said:

“The regulatory barriers and distortions to competition identified in this market study can be better and more proportionately addressed by Ofwat and other government departments acting on the recommendations in this study.”

"Apparent culture of some companies a barrier to competition"

In its market study into the treatment of organic waste in England and Wales the OFT identified a number of barriers to competition related to aspects of economic, environmental and planning regulation, and to the apparent corporate culture of some water and sewerage companies. The OFT has worked closely with Ofwat throughout the market study.

The report makes a range of recommendations aimed at promoting competition and thereby driving efficiency and innovation in the sector.

At the heart of the recommendations are proposed changes to the economic regulation of water and sewerage companies to foster efficiency and help create a level playing field between them and other suppliers of organic waste treatment. The study also recommends greater harmonisation of the environmental regimes applicable to sewage sludge and other organic waste.

In addition, the OFT considers that planning policy proposals currently under consideration could contribute to greater competition.

Sonya Branch, OFT Senior Director of the Services, Infrastructure and Public Markets Group said:

"Our market study, conducted with Ofwat's support, identifies that there is greater scope for competition in the treatment of organic waste, however the current economic regulation, environmental protection and planning regimes are barriers to this competition developing.

"We have therefore today made a number of recommendations to Ofwat and other government bodies that have the potential to tackle these barriers to competition, benefit consumers and drive efficiency and innovation in organic waste treatment."

The OFT will now consult on its provisional decision not to refer the issue to the Competition Commission for further investigation. Written responses to the consultation on the OFT's provisional decision not to refer the matter to the Competition Commission should be sent by 5pm on 27 October 2011 to This e-mail address is being protected from spambots. You need JavaScript enabled to view it or to Organic Waste Market Study, Floor 4C, Office of Fair Trading, Fleetbank House, 2 - 6 Salisbury Square, London EC4Y 8JX.

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