Düsseldorf Higher Regional Court confirms Bundeskartellamt decision in the proceedings against E.ON Ruhrgas

The President of the Bundeskartellamt, Ulf Böge, sees in the decision of the Düsseldorf Higher Regional Court “a landmark decision in favour of competition in the gas markets”.

The Bundeskartellamt informed E.ON in January that its gas supply contracts with distributors in their combination of long-term purchase obligations and high degree of requirement satisfaction violated European and German competition law. The authority prohibited E.ON from pursuing such practices. The prohibition decision was immediately enforceable. E.ON appealed against the immediate enforceability and the decision on the merits of the case before the Düsseldorf Higher Regional Court.

In an expedited proceeding the court has declared the immediate enforceability of the Bundeskartellamt’s decision to be legitimate. The court emphasizes, in particular, that the decision does not endanger the security of energy supply.

Bundeskartellamt President Dr Böge stated: “The Bundeskartellamt was right to act ex officio against the long-term exclusive dealing agreements between municipal utilities and gas transmission companies after two municipal utilities (Stadtwerke Aachen versus Thyssengas and Stadtwerke Schäbisch-Hall versus Gasversorgung Süddeutschland) had withdrawn their actions in 2003 shortly before a decision by the Federal Supreme Court was taken. These long-term exclusive purchasing agreements with one supplier prevent competition between gas transmission companies and foreclose the market to new suppliers.”

Dr Böge continued by saying: “The invalidity of the long-term contracts will make renegotiations necessary. This will enable all the municipal utilities that have concluded such long-term contracts to negotiate more favourable conditions, just as others whose supply contracts expired recently have done. The Bundeskartellamt will see to it that these more favourable purchasing conditions are passed on to end consumers in the form of lower gas prices. I am convinced that the competition authorities of the Länder will also keep an eye on this.”

However, according to Dr Böge, the remaining drawback is that there is still no transmission obligation in the gas sector which conforms to the principles of competition. “Judging from past experience I do not expect much willingness to cooperate from the major players in the gas sector. Unbureaucratic, transparent and non-discriminatory network access with competitive network use fees is not in their interests. Without a quick and clear decision by the Federal Network Agency on the gas transmission model the potential to lower prices in the market cannot be realized.”