The City of Montreal is barring Ricova, which has a powerful hold on the industry and operates both the city's recycling sorting centres, from bidding on contracts for the next five years.
The decision, confirmed Wednesday by the office of Mayor Valérie Plante, does not affect existing contracts with the city.
Ricova Services Inc., based in Brossard, Que., has been operating Montreal's two recycling sorting centres, in Lachine and Saint-Michel, since 2020 and collects curbside recycling from two of the city's boroughs.
It also has collection contracts with several municipalities in the Montreal area.
In a report earlier this year, the city's inspector general, Brigitte Bishop, alleged the company did not pay Montreal its fair share of recycling profits.
She said Ricova Services Inc. had sold recyclable materials to one of its sister companies, Ricova International Inc., which then sold them to outside buyers at a higher price.
In all, the report alleges Ricova withheld more than $1 million it owed the city for recycled materials it sold over a 12-month period.
She recommended the city block the company from bidding on contracts for five years and cut ties with the company "as soon as possible."
High contamination levels at sorting centres
A spokesperson for the mayor's office said the announcement fulfils the first recommendation from the Bureau de l'Inspecteur Général (BIG) but that more remains to be done.
"The investigation launched by the BIG was extremely conclusive and upon receipt of the report, the process was launched to implement the recommendations of the inspector general as soon as possible," said Marikym Gaudreault.
The city has been critical of Ricova for its work at the two sorting centres, where sorted materials have been found to have high contamination levels, which makes it difficult to sell and ultimately, recycle.
Ricova has denied any fraudulent activity and it appears the company will not relinquish its Montreal contracts without a fight.
The company sent a legal letter to the city last month, threatening to sue if the city follows through on Bishop's recommendation to cut them off.
In a statement Wednesday, spokesperson Stephanie Dunglas said "we take note of the city's decision and will take the appropriate remedies in the circumstances."
"We will continue to provide the same level of service under the various contracts we have with the City of Montreal until this situation is resolved," Dunglas said.
Transparency needed, advocate says
Karel Ménard, a recycling advocate and the executive director of the Quebec Coalition of Ecological Waste Management, welcomed the city's decision.
He said it's crucial that residents have confidence in the city's recycling system, or they will stop putting materials in their blue bins.
Ménard said Montreal should look for inspiration in other municipalities, which use non-profit organizations to run their recycling sorting centres.
"We need to have transparency," he said.