Consumer group faces bankruptcy Challenged Fee; On hook for court costs in pop bottle fight
OTTAWA - The Consumers' Association of Canada is facing ruin and may be forced to dissolve as a result of a continuing legal battle with Pepsi, Coca-Cola and other beverage companies that charge consumers to recycle cans and bottles in British Columbia.
The association has been ordered by a court in British Columbia to pay the legal fees of the companies it has been fighting, a ruling that was recently upheld by the province's Supreme Court. Unless it can have that decision overturned by the Supreme Court of Canada, the group will likely fold, association president Bruce Cran said yesterday.
"We don't have hundreds of thousands of dollars to pay for those fees. We'll virtually be bankrupt," Mr. Cran said. "We're the only consumer group that speaks out on issues at all in Canada. If we're gone, that will leave Canadians without a voice."
The 60-year-old association may have to pay as much as $400,000 in legal fees to the beverage industry, Mr. Cran said.
The small, volunteer-based national group has been fighting the beverage giants, along with bottle-collection agency Encorp Pacific (Canada), in British Columbia courts over a non-refundable recycling charge that is added to the cost of beverages.
Under B.C.'s recycling system, consumers are charged a deposit on non-alcoholic beverage containers and can return them to a recycling depot for a refund. Encorp charges and collects the deposit on behalf of the beverage companies, which compensates Encorp for the refunds it provides to consumers.
The refundable deposit, which is set by the government, is 5¢ for containers under one litre and 20¢ for those bigger than one litre.
But the company also charges a non-refundable "container-recycling fee" on some bottles to cover its own costs when other revenue sources are not enough.
The fee ranges from 1¢ to 5¢, depending on the type of bottle and its recycling cost.
Mr. Cran describes the nonrefundable fee as "illegal" and a "tax" being raised on behalf of private enterprise. He said it should be given back to consumers instead of collected and kept by a private company.
"The only interest we have in this case is to protect consumers who we feel have been damaged at the moment the way it is," Mr. Cran said.
He said the plan has raised as much as $200-million for the beverage industry.
The association failed in its attempt to bring a class-action lawsuit against the beverage companies challenging the non-refundable fee on the basis that it was unconstitutional.
Encorp, which collects bottle deposits on behalf of the beverage company and covers the cost of recycling, said it does not make a profit and the fee is necessary to run the business.
"It's important to know we're a not-for-profit," president Neil Hastie said. "The fee is necessary in order to provide sufficient money to operate the entire system. This is an entirely user-paid system. There's no government money involved here."
He said a portion of the company's operating funds comes from bottle deposits that consumers have not redeemed. But some bottles, such as glass containers, are more expensive to recycle, and the not-for-profit company sometimes does not have enough to cover it, so it charge sa non-refundable fee on some containers.
© National Post 2007