Germany's 'Green Dot' Waste Management System

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Case Details:

Case Code : BENV011
Case Length : 21 Pages
Period : 1990-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : DSD GmbH
Industry : Services (Waste Management)
Countries : Germany

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

In its first year, the system's success resulted in packaging waste pouring in from all over Germany. The amounts were much larger than anticipated and the collection, sorting, and storage of thousands of tons of waste proved to be very expensive. Another problem was that several companies defaulted on their payments in the initial months. With increasing costs and falling revenues, DSD slid toward bankruptcy in 1993. Even as DSD faced financial collapse, it continued to record high recycling rates for plastics and other materials.

In 1993, DSD was bailed out, with member companies infusing fresh capital and implementing a new fee schedule.

Over the next few years, DSD grew from strength to strength and helped Germany overcome some of its problems associated with the lack of landfill space. Neighboring countries such as Austria, Belgium, France, Luxembourg, Portugal, Spain, and Norway also adopted the Green Dot system to comply with the EC's Packaging Directive⁵.

However, the system was continually criticized for its inflexibility and inefficiency.

In April 2001, the European Commission accused DSD of abusing its monopoly situation. It was asked to share facilities and not charge companies that wished to use the services of competing firms. DSD appealed to the Court of First Instance. DSD's appeal was rejected by the court in 2007. Meanwhile in 2004, DSD was acquired by Kohlberg, Kravis, & Roberts, Inc.⁶, and became a for-profit company. As of 2007, while the Green Dot system was acknowledged by some as an effective waste management solution, criticism of its inefficiency continued.

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5] The Packaging Directive, passed in December 1994, “aimed to harmonize national measures concerning the management of packaging and packaging waste in order, on the one hand, to prevent any impact thereof on the environment of all Member States as well as of third countries or to reduce such impact, and, on the other hand, to ensure the functioning of the internal market and to avoid obstacles to trade and distortion and restriction of competition within the Community.” (Source: http://eur-lex.europa.eu)

6] Established in 1976 by Henry Kravis and George Roberts, KKR has grown to become one of the world's largest private equity firms. The company specializes in management buy-outs. It invests on behalf of itself and institutional investors like state and corporate pension funds, banks, insurance companies and other financial institutions. As of March 31, 2007, KKR's equity investments were valued at over US$ 76 billion.