Beverage companies have told the Federal Court that the Northern Territory's "cash for cans" recycling scheme is a form of prohibition on drinks sales and so runs counter to federal law.
The court is considering an application in Sydney by Coca-Cola Amatil, Schweppes Australia and Lion for the NT scheme to be declared invalid so they don't have to comply with it.
The scheme is similar to a long-running one in South Australia and involves a 10 cent deposit on drink purchases, refundable when the container is returned to a recycling agent.
Coca-Cola increased its drink prices in the Northern Territory when the scheme was introduced a year ago, and says its prices will drop if it wins the court case.
In court on Tuesday, Bret Walker, the lawyer for the three companies, said the NT scheme ran counter to the national Mutual Recognition Scheme.
"The Mutual Recognition Act plainly trumps the Territory legislation," Walker said, noting that the act's aim was to ensure the free movement of goods between states and territories without prohibitions.
If drinks companies did not label their containers in the NT with the refund message, they were prohibited from selling their products there, he said.
Walker said the Mutual Recognition Scheme aimed to avoid state or territory governments acting to "prevent or restrict the sale of goods" from another state or territory.
"There's a case that there's a prohibition, or a conditional prohibition ... it's a restriction of the sale of goods in the territory," he said of the NT scheme.
But the NT Solicitor-General, Michael Grant QC, told the court the scheme did not impose any prohibition on the sale of beverages.
He said it did not seek to prevent or restrict the sale of goods but only to encourage container recycling and to limit pollution and waste.
"It's a law regulating the sale of beverages in only one particular aspect ... concerned not with whether beverages can be sold but how they can be sold."
