Today the Bundeskartellamt has published its final report on the sector inquiry into the electricity wholesale sector which it launched in March 2009. The object of the inquiry was to examine the competition situation and pricing on the German electricity production and wholesale markets in 2007 and 2008.

Andreas Mundt, President of the Bundeskartellamt, stated: "Thanks to the sector inquiry we have been able to clarify key questions on market and competition processes on the electricity wholesale markets. This gives us a sound basis for detecting and preventing the abuse of market power."

The inquiry revealed that the competitive situation on the market for the first-time sale of electricity remains unsatisfactory. Just four companies still hold a good 80 % share of the first-time sales market. The analysis of the competition situation would seem to suggest that these providers (RWE, E.ON, Vattenfall and possibly also EnBW) each have a dominant position in Germany. This is clear from the fact that each of them was indispensible for covering electricity demand over a significant number of hours in the period examined.

Based on extensive investigations on supply behaviour on the electricity exchange and the operational management of more than 340 power station blocks, the Bundeskartellamt examined whether there are indications of companies withholding power station capacities in order to force up the prices on the electricity exchange. On the basis of the data examined on the operational management of power stations and the cost situation of individual power stations, no evidence was found that substantial production capacities had been systematically withheld. Nonetheless the extensive empirical analysis of market activity revealed that the leading producers have the incentive and possibilities to considerably influence the electricity price by abusively holding back capacities. The sector inquiry has brought to light the main aspects on which abuse control under competition law should focus in this highly complex market. It has raised a whole range of issues which require further discussion and clarification by the electricity providers.

It would therefore seem advisable in future to continue to subject supply behaviour on the electricity exchange and the operational management of power stations to effective control by the competition authorities. The calculation model used by the Bundeskartellamt can identify any behaviour which is likely to raise concerns. The sector inquiry thus provides an analytical framework for detecting abuse in the form of capacity withholding in future cases.

This analytical framework must be complemented by improved access to power station production data. Issues raised during the investigation can be best addressed under a market transparency scheme which has prompt and direct access to the necessary data. The Bundeskartellamt therefore strongly supports the launch of a market transparency scheme planned by the Federal Government. Such a market transparency scheme can also help to substantially raise the deterrent effect of abuse control.

The complete report on the sector inquiry into electricity production and wholesale is available here. A short version of the report can be downloaded here.

The Bundeskartellamt is interested in a dialogue with market participants, associations and interested political groups. All parties involved have the opportunity to submit their comments on the report on the Sector Inquiry into Electricity Wholesale by 15 March 2011.