The plastics industry is widely recognised as one of the most environmentally damaging industries in today's society. As environmental concerns continue to grow, public authorities in Europe have introduced regulations to tackle plastic pollution, with the aim of moving towards a circular economy. The transition to a circular economy brings about profound changes in the organisational structures and strategies of companies. Transforming business models is therefore an essential step in this transition. While existing research has explored macro-level influences on circular business models, the dynamic interplay between micro, meso and macro levels remains understudied. However, in order to grasp the complexity and facilitate the implementation of a circular economy, several works have highlighted the importance of a systemic approach to examine the three levels simultaneously: micro, meso and macro. To fill this gap, our study examines the dynamic interactions between these three levels that shape the transition to a circular economy in the French plastic food packaging sector. Dynamic interactions between innovative business models, incumbents and policy makers are defining the industry's transition path. At the macro level, public policies and societal movements have disrupted the traditional linear plastic food packaging supply chain, prompting a shift towards circularity. In response, incumbents are forced to innovate, but often opt for incremental changes that maintain the status quo of supply chain organisation. While these incumbents, particularly prominent food brands, are influenced by public policy, they also lobby to shape the direction of change, sometimes to the detriment of authentic circularity. Meanwhile, at the micro level, innovative business models leveraging technologies such as chemical recycling and bio-based plastics have emerged as potential circular solutions. These innovative business models, in turn, are disrupting the functioning of the plastics supply chain to varying degrees, creating a context of uncertainty about the trajectory of the transition. Our findings underscore the complexity of managing sustainability in the plastic packaging industry and highlight the central role of stakeholders in shaping its future trajectory. By elucidating the dynamic interactions between business models, incumbents and policy makers, our study contributes to a deeper understanding of the complexities involved in navigating towards a circular economy paradigm.