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Remunicipalisation of gas and electricity networks

As contracts from the 90s will expire within the next few years, several thousand concessions for the operation of gas and electricity networks will be newly awarded nationwide in e.g. Berlin, Hamburg, Stuttgart, Bremen and Leipzig.

Trend towards remunicipalisation

A trend towards remunicipalisation can be observed. In some cases municipalities have tried to give their own utilities preference in the award decision. However, the legal criteria which have to be complied with in the award of new contracts rule out such preferential treatment.

The award of rights of way is an enterprising activity to which competition law applies. As the local authorities hold a dominant position in their municipalities, they are subject to the prohibition under competition law of the abuse of a dominant position and to the Energy Industry Act.

Legal criteria for the award of new contracts

Under the Energy Industry Act and the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB) the bidder with the best offer should receive the concession award. The network should operate in a secure, affordable, consumer-friendly, efficient and environmentally friendly way. The bidder which is best suited to ensure these objectives must be selected in a non-discriminatory manner.

In 2010, in order to help the parties involved in award proceedings implement current energy law and competition law provisions, the Bundeskartellamt and the Bundesnetzagentur published joint guidelines for the award of concessions for gas and electricity networks (German version).

Court decisions

In 2013 the Federal Court of Justice issued two decisions of principle on the award by municipalities of concessions for gas and electricity networks. These confirm the position taken by the Bundeskartellamt in its decision-making practice and the joint guidelines for the award of concessions for gas and electricity networks. The court clearly stated that the award must be carried out in a non-discriminatory and transparent procedure and under competitive criteria. An unjustified preference for the musicality’s own utility is not allowed.

See for further detail:
Federal Court of Justice issues decision of principle on the award of concessions for gas and electricity networks (press release of 18.12.2013).

Besides the Federal Court of Justice, many higher civil courts and higher administrative courts dealing with the award of concessions by local authorities have also concluded that municipalities have to conduct tenders for the award of rights of way for gas and electricity networks in a transparent and non-discriminatory manner (and not give preference to their own municipal undertakings) and that this should not violate the guarantee of self-government for municipalities. See for further detail: Schleswig Higher Regional Court, decision of 22.11.2012 - 16 U (Kart) 22/12, Düsseldorf Higher Regional Court, decision of 09.01.2013 – VII-Verg 26/12 and decision of 17.04.2014 – VI-2 Kart 2/13, Stuttgart Higher Regional Court, decision of 07.11.2013 – 201 Kart 1/13, Munich Higher Regional Court, decision of 26.09.2013 – U 3587/12 Kart; Mannheim Higher Administrative Court, decision of 22.08.2013 – 1 S 1047/13, Lüneburg Higher Administrative Court, decision of 11.09.2013 – 10 ME 87/12.

Further information and decisions

  • You will find further decisions and case summaries of the Bundeskartellamt on the competitive award of concessions for electricity and gas networks by municipalities here (German versions).