EU tells HP et al to scrap inkjet ‘clever chips’

Recycling law could torpedo refill revenues

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Prices of printer cartridges look set to drop thanks to a new EU law that will ban printer firms from forcing consumers to buy their own-brand refills.
The European Parliament voted unanimously on Wednesday in favour of a new EU "electroscrap" recycling law, which includes a ruling directing manufacturers of printers to no longer incorporate chips into their own-brand ink refill cartridges. These chips prevent cartridges produced by other manufacturers from being used in many printers.

In addition, proponents of the measure say the chips prevent them from being refilled -- a feature on many cartridges made by printer manufacturers.

According to the European Parliament press office, member states must take measures to minimise the disposal of so-called electroscrap by consumers as unsorted municipal waste. Among the measures was a provision on better product design "aimed at preventing producers from getting round recycling rules (by designing products with 'clever chips' to ensure that they cannot be recycled, e.g. ink cartridges for printers)."

The news will be a blow to printer companies like Hewlett-Packard, Epson, Canon and Lexmark, which derive significant portions of their revenues from non-reusable cartridges. Colour printers can be bought for as little as EUR100, but prices charged for refill cartridges tend to start at around EUR30 and rising.

The EU law could hit HP the hardest, because the US company depends heavily on revenues from ink cartridge sales and is the largest cartridge producer in Europe. HP's consumables business, including inkjet cartridges and laser jet toner, account for more than half of the printer group's revenues, which were more than USD20 billion in fiscal 2002.

The director of the Consumers Association of Ireland, Dermot Jewell, welcomed the news. "It has at its heart a very positive aim," he said. "One of a whole series of moves designed to inject some sort of reason into the business regarding recycling." However, he said that he wouldn't be surprised if manufacturers raised their prices because of the immediate costs to them associated with the recycling laws.

Under the new rules, manufacturers will be required to pay for the recycling of electrical goods ranging from shavers to refrigerators and laptop computers. The EU hopes 75 percent of such goods can be recycled. The law is due to come into force in September 2005.

It is estimated that old electrical appliances account now for some 6 million tons of waste across Europe, most of which goes into landfills. Manufacturers estimate the rules could cause them to spend USD7.7 billion a year to collect and dispose of the waste. They warn the costs could be passed on to consumers.

However, industry representatives have generally welcomed the new rules, particularly that manufacturer will pay for recycling its own waste once the plan is fully operational, instead of sharing costs across the industry. Producers will, however, have to share the costs of disposing of equipment sold before the law comes into force.

Four leading electrical manufacturers-Electrolux, Hewlett-Packard, Sony and Braun-met in Brussels this week to consider how best to gather and dispose of old goods.



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