Bundeskartellamt issues first-time ruling on abusive practices against network operator on account of excessive fees for network use

The Bundeskartellamt in Bonn has prohibited Thüringer Energie AG (TEAG) which belongs to the E.ON group of companies from charging abusively excessive fees for network use and has ordered TEAG to reduce its current fees for network use which would lead to an approximately 10 per cent reduction in revenue. The competition authority has declared the decision immediately enforceable. The decision was preceded by a warning letter issued by the authority on 13 December 2002 and a public hearing which took place on 15 January 2003. This is the first ruling on abusive practices issued by the Bundeskartellamt within the context of the ten formal abuse proceedings relating to excessive fees for network use initiated at the end of January 2002.

According to the President of the Bundeskartellamt, Ulf Böge, this was the first case in which the Bundeskartellamt has made use of its possibility (confirmed by the courts) to examine the cost calculation of the company concerned. As even in the opinion of TEAG no comparable companies could be considered in this case the comparable market concept which the Bundeskartellamt generally prefers could not be applied. The aim of all proceedings was to substantially reduce fees for network use which due to their level currently constitute the main obstacle to effective competition in the electricity markets. According to President Böge the authority expects this decision to set an important signal.

The examination of the cost calculation of TEAG’s fees for network use, which was carried out on the basis of the criteria developed by the competition authorities in a working group report dated April 2001, confirmed the suspicion that TEAG charges abusively excessive fees for network use. An estimate of imputed costs, such as an equity yield rate at current cost value, and a risk allowance thus considerably increased the network costs. Such imputed items accounted for about 80 per cent of the potential for reductions.

For example, TEAG had attributed advertising costs to the network which in the opinion of the Bundeskartellamt must not be borne by the network users and which constituted cross-subsidising in favour of distribution.

According to the Bundeskartellamt this makes non-discriminatory network access as stipulated by the lawmaker more difficult.

The Bundeskartellamt’s decision can be appealed against before the Düsseldorf Higher Regional Court.