Most price abuse proceedings against gas suppliers terminated

The Bundeskartellamt has in most cases terminated the abuse proceedings initiated against gas suppliers in March. In 29 cases of the 33 pending proceedings, the companies have offered monetary compensation for consumers amounting to 127 Mio euros. Approximately 50% of this sum is accounted for by bonus payments and credits to be granted in the next annual statement or final account of customers. The remaining amount will be transferred to customers via price reductions or the postponement of price increases. The cited amounts are net amounts, i.e. customers are additionally relieved from the burden of having to pay taxes and duties on them. Furthermore, to a large extent the gas suppliers concerned have agreed not to pass on increased gas procurement costs this year.

The proceedings were instituted against gas suppliers of differing sizes from all geographic regions in Germany. The subject of the proceedings were their pricing policies in 2007 and 2008. The proceedings were instituted, inter alia, on the basis of the new Section 29 of the ARC, which provides for a stricter abuse control of energy suppliers. Following the comparative market concept, the turnover which the companies concerned achieved in 2007 was compared to that of gas suppliers offering lower prices. As regards data for 2008, the Bundeskartellamt based its assessment on a comparison of the tariffs used by the majority of the customers of the target and comparable companies. For its evaluation, the Bundeskartellamt deducted network fees (approx. 16% of the gross price) as well as taxes and licence fees (approx. 29% of the gross price). Accordingly, the turnover component (or price component) examined by the Bundeskartellamt accounts for a good 55% of the gas price the citizens see on their gas bill.

The suppliers have made ample use of the possibility provided by the law to put forward objective justifications for the price deviations, the major one being their procurement costs. The Bundeskartellamt, however, has also compared the procurement behaviour of these companies to that of other suppliers in order not to accept the stated procurement costs without challenging their authenticity.

The Bundeskartellamt has opted for a commitment solution because the amount of consumer benefits achieved by this almost equals the amount that would have been achieved by way of a formal decision. Most significantly, consumers benefit directly from the advantages.

In addition, the Bundeskartellamt’s findings suggest that the profitability of the companies concerned does not allow for any further concessions. The companies and the Bundeskartellamt continue to differ about the case; nevertheless, the proceedings were concluded by means of a commitment solution to avoid protracted legal disputes. This way, customers will largely benefit from the price measures during the heating period in winter, and tenants as so-called “trapped customers” will also profit. The settlement also comprises the assurance that the financial commitments will not be compensated for by future price measures.

In many of the concluded cases customers still largely depended on receiving their gas from the companies concerned because the alternative gas suppliers were of little significance. The Bundeskartellamt hopes, however, that progressive regulation will trigger competition also in the gas sector. Today President Heitzer stressed the interests of new energy suppliers: “It is the purpose of price abuse control by competition authorities only to intervene where competitive forces alone are not able to restrict the scope of action of the established companies. Those who examine and make use of the possibilities to change suppliers will contribute decisively to developing competitive structures in the gas sector.”

Of the approx. 770 gas suppliers in Germany, only 30 companies fall in the Bundeskartellamt’s area of competence, the others fall in the area of competence of the competition authorities of the Länder. Several Land competition authorities are also conducting proceedings or have already concluded them. In addition, the competition authorities of the Länder have referred 14 gas suppliers from their area of competence to the Bundeskartellamt.