News and Statements
Slovenian precedent: how the EU Court ruling confirmed the right of states to a single-
PRO system — and why it matters for Ukraine
Recently, the Court of Justice of the European Union issued a landmark ruling in the
INTERZERO case (C-254/23). As the EU’s highest judicial authority, it confirmed Slovenia’s
right to establish a mandatory centralized waste management model with a single non-profit
Producer Responsibility Organization (PRO) for each product category. The Court has
published the operative part of the judgment, and the full text is expected to follow soon.
For Ukraine — which is only now planning to develop its own Extended Producer Responsibility
(EPR) system for packaging and packaged goods — this ruling is more than just a legal
precedent. It is a strategic guide on how not to make mistakes when designing a system that
must ensure the country’s transition to the principles of a circular economy.
What is the essence of the INTERZERO case?
Slovenia, in implementing EU legislation on separate collection and recycling of packaging
waste, reformed its EPR system.
Instead of six private operators competing for market share and acting for profit, the state
returned to a centralised model with a single non-profit Producer Responsibility Organisation
(PRO) for each product category. The reason: the activities of private operators (the so-called
integrated companies), to whom producers had “delegated” the fulfilment of their recycling
targets, were slowing down the development of the circular economy.
The fragmented system proved ineffective and unable to accumulate the resources needed to
develop infrastructure. Slovenia faced potential European Commission sanctions for failing to
meet its recycling targets. Therefore, the government decided to abandon the market-based
approach and restore the model previously used in the country, where a single non-profit PRO
coordinates the collection, sorting and recycling of all packaging waste.
Private companies — Interzero and Surovina — challenged this reform, claiming it allegedly
contradicted EU law, in particular the principles of freedom of establishment and freedom to
provide services under the Treaty on the Functioning of the EU (TFEU). The case was referred
to the Court of Justice of the European Union.
What did the Court decide?
A key element of the Court’s decision in this case is the concept of Services of General
Economic Interest (SGEI). Under EU law, these are services that are critically important for
public welfare. A state may establish special conditions for the providers of such services —
even if these conditions appear to conflict with free market principles.
Examples of SGEI include: water supply, public passenger transport in sparsely populated
areas, access to electricity, and postal or telecommunications services.
The Court of Justice of the EU ruled that the EPR system in Slovenia constitutes a Service of
General Economic Interest. Therefore, the state is entitled to limit market mechanisms in this
sector if such measures are necessary to achieve environmental objectives.
Why does this matter for Ukraine?
The same arguments that private companies used in their lawsuit against the Slovenian
government are now heard in Ukraine — about competition, the free market, and the need to
allow private companies into the EPR system. One of the draft laws “On Packaging and
Packaging Waste” would permit PRO organizations to be formed by market participants that
collectively represent just 5% of the market. This creates the conditions for 10–20 competing
PRO organizations to emerge in our country.
However, as Volodymyr Slabyi, Executive Director of UKRPEC, explains, a competitive
model does not support the achievement of national environmental goals. The experience of EU
member states — Slovenia included — clearly shows this. Such a model does not incentivize
investment in collection and recycling infrastructure. On the contrary, producers who increase
their contributions to the financing of the EPR system become less competitive compared to
those who choose not to.
— Private operator companies focus on profits, while producers focus on saving money.
Only the most economically attractive types of waste end up being recycled, and
infrastructure is developed only in areas where it is cheapest. Meanwhile, the national
system as a whole stagnates.The funding that is secured is spent inefficiently: residents find several sets of containers
from different PROs in their yards, all serving the same purpose. This situation occurred,
in particular, in Poland. And all these unnecessary costs are ultimately borne by
consumers, since the expenses for waste management are included in the cost of
goods.However, as long as producers formally meet their individual obligations, the government
has no grounds to intervene. A fragmented system can function at the initial stage, while
recycling targets remain low. And this creates a dangerous illusion among market
participants. But recycling targets at the level of 50–60% are already unachievable for
such a model. The experience of many European countries proves this — as happened
in Slovenia, where the state was forced to return to a centralized system with a single
non-profit PRO.The key task for Ukraine is to learn from others’ mistakes. Why create an unviable
system that will inevitably have to be fixed later under the threat of sanctions from the
European Commission? We have the opportunity to do everything right from the start.
That is why UKRPEC has always advocated for a model with a single non-profit PRO, — emphasizes Volodymyr Slabyi.
The Court of Justice of the EU decision in the INTERZERO case (C-254/23) is an important
precedent that creates additional legal grounds for a model with a single non-profit EPR and will
influence the development of packaging waste management systems in many European
countries.