Bundeskartellamt opens abuse proceedings against approx. 35 companies on grounds of excessive gas prices

On the basis of the new Section 29 of the Act against Restraints of Competition the Bundeskartellamt has initiated abuse proceedings against approx. 35 gas suppliers on the grounds of their charging abusively excessive gas prices to household and commercial customers. A preceding nationwide survey of the prices of all established gas suppliers active in this area of supply has shown that in some cases there are considerable differences in price of 25 per cent to 45 per cent and more between the companies. Involved in the proceedings are companies from all regions in Germany, municipal and rural suppliers, independent municipal utilities, and providers which are associates of the four major grid companies.

The outcome of the survey leaves Bundeskartellamt President Bernhard Heitzer with only one conclusion, i.e. that the intensity of competition in the supply of household and commercial customers with gas is still shockingly low: “According to current knowledge a number of companies are raising gas prices to a level which would not be possible if effective competition were in place. Even where fees for network use are low, the cost benefit is often not passed on to customers but obviously compensated for by price increase at another level of the value chain. We shall examine this wave of gas price increases for cases of abuse."

In comparing gas prices paid by the end consumer, the Bundeskartellamt has deducted the approved network fees as well as taxes and licence duties. This allows for a much more precise basis for assessment and is likely to leave the companies little room to justify their behaviour with any special characteristics of their specific supply area. Taxes and duties make up an average share of 29 per cent of the gross price, the network fees, which have been approved after examination by the regulatory authorities, 16 per cent. The price components examined by the Bundeskartellamt account for a good 55 per cent of the gross price, which the citizen sees on his gas bill and which can be compared with other prices on internet portals established for this purpose.

Specifically involved in the proceedings is the market for the supply of mineral gas to standard load profile customers, i.e. household and commercial customers which are billed on a consumption-only basis. In 2006 the volume of mineral gas supplied to households and commercial customers in Germany amounted to approx. 480 billion kWh; gas suppliers realized a turnover of 17.28 billion € in this market. With approx. 4 million customers and a sales volume of approx. 100 billion kWh the abuse proceedings against the companies involved cover near to 20 per cent of the market.

Of the approx. 770 gas suppliers in Germany, only 30 companies providing basic cross-Länder gas supplies fall originally in the Bundeskartellamt’s area of competence, the others falling in the area of competence of the respective Land competition authority. Some Land competition authorities have already initiated proceedings. Furthermore, at the Bundeskartellamt’s request, many Land competition authorities have either referred several gas suppliers with high gas prices from their area of competence to that of the Bundeskartellamt or plan to do so. Further proceedings are therefore likely to follow.