State AGs say Plastics Pact, others are misleading consumers, violating antitrust laws

Five state attorneys general recently sent letters to heads of the U.S. Plastics Pact, GreenBlue and the Consumer Goods Forum expressing concern that those organizations could be violating federal and state antitrust laws through their attempts to create a circular economy for plastics.

The letters are signed by attorneys general James Uthmeier of Florida, Brenna Bird of Iowa, Mike Hilgers of Nebraska, Austin Knudsen of Montana and Ken Paxton of Texas. In each, the state officials say they “have a duty to protect the citizens of our states from unlawful business practices.”

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Each letter requests the organizations provide responses to the concerns raised, as well as a detailed legal basis for why the organizations believe they are not violating antitrust or consumer protection laws and all documents that support their position.

Questioning the Pact

In the letter addressed to Jonathan Quinn, president and CEO of the Walpole, New Hampshire-based U.S. Plastics Pact, the attorneys general write that while the mission of the Pact is to facilitate the transition to a circular economy for plastic packaging in the United States by bringing together resources and expertise across the entire plastics value chain, they have “grave concerns” that the mission is harmful to their states’ economies, results in higher costs to consumers, restrains trade and reduces quality and output of goods and services.

“Indeed, it appears that such a mission is nothing less than a frontal assault on the basic policy of the Sherman Act,” the officials write.

The letter notes four targets that Pact members were required to reach by this year, including defining a list of plastic packaging that is problematic or unnecessary and take steps to eliminate the items on that list; develop packaging that will be 100 percent reusable, recyclable or compostable; take ambitious actions to effectively recycle or compost 50 percent of plastic packaging; and achieve an average of 30 percent recycled content or responsibly source biobased content in plastic packaging. Additionally, the officials cite information found on the Pact’s website that says, through these targets, the Pact seeks to create the strength of collection action on the ground in communities, businesses and retail and to work together toward a common vision of a circular economy for plastics.

“In other words, it appears that the Pact uses these targets to ensure as many stakeholders as possible, across entire markets, artificially change the output and quality of their goods and services in a uniform manner, in a way that normal, unrestrained market forces would not otherwise bring out,” the attorneys general write. “This has all the trappings of the sort of adverse, anticompetitive effects that the antitrust laws seek to prevent.”

When it comes to the Pact’s coordination with different stakeholders, including businesses, nonprofits, research firms and government agencies, among others, to achieve its targets, the attorneys general claim the Pact’s “insistence” that those stakeholders must “urgently make systemwide changes” also is concerning.

The attorneys general write that they have a duty to protect citizens of their states from unlawful business practices, adding that such unlawful practices can consist of facially anticompetitive restraints or reduced output, increased prices or reduced quality in goods or services or an agreement not to compete in terms of price or output.

“The Pact is clear about its desire to artificially create a ‘unified national framework’ by bringing together many stakeholders to artificially drive ‘systemic change’ to the output and quality of goods and services in all areas involving ‘postconsumer plastic packaging,” the letter states. “Indeed, the Pact appears to be aware of the antitrust implications of its activities, given its ‘disclaimer’ containing language seemingly inapposite to its own mission. When it comes to enforcing applicable antitrust laws, we will not remain idle.

In addition to antitrust laws, the letter says various consumer protection laws may also be implicated. For instance, the letter claims “Pact members who fail to meet the Pact’s targets or otherwise set unrealistic goals at the urging of the Pact risk misleading consumers by failing to disclose material facts regarding the viability of an unrealistic and artificial Pact agenda.”

The letter continues, “The Pact and its members also may be misleading consumers about the benefits of achieving the targets or about the alleged harm that the Pact seeks to avoid. Once again, we stand ready to enforce our laws and protect our consumers.”

Striking a similar tone

In the letter addressed to Paul Nowak, executive director of Charlottesville, Virginia-based nonprofit GreenBlue and its Sustainable Packaging Coalition (SPC), the attorneys general cite the organization’s website when describing its mission “to bring sustainable packaging stakeholders together to catalyze actionable improvements to packaging systems and lend and authoritative voice on issues related to packaging sustainability” to implement change in plastic packaging.

The letter says the SPC has made its goals clear and, among other things, seeks to assist with research into new materials, collaboratives focused on end markets, developing a holistic packaging design strategy that includes identifying opportunities for elimination or reduction, evaluating sourcing practices and seeking entirely new strategies by exploring alternative ways to approach the package/product system. The letter points out that SPC’s membership encompasses the entire packaging value chain.

“These goals appeared designed to ensure as many stakeholders as possible, across entire markets, artificially implement ‘new strategies’ that affect the output and quality of goods and services in a uniform manner, in a way that normal, unrestrained market forces would not otherwise bring about,” the letter says.

The letter addressed to Wai-Chan Chan, managing director of the Paris-based Consumer Goods Forum, cites its mission, which includes bringing together consumer goods manufacturers and retailers in pursuit of business practices for efficiency and positive change, and its involvement in attempts to create a circular economy for plastics.

“The Forum has made clear its goals,” the letter says, citing the organization’s website. “The Forum seeks to bring consumer goods retailers and manufacturers together globally. … to collaborate, alongside other key stakeholders, to secure consumer trust and drive positive change.

“The forum also pursues moving from a linear to a circular economy, which requires a different approach to plastic usage, from production, consumption and reuse, to recycling and disposal.”

The attorneys general write that the Forum, which also has a regional office in Washington, is clear that it is “forcing collaboration that otherwise would not have occurred,” adding that its goals “appear to be designed to ensure as many stakeholders as possible, across entire markets, artificially implement a new approach that affects the output and quality of goods and services in a uniform manner, in a way that normal, unrestrained market forces would not otherwise bring about.”