Monitoring the electricity and gas markets

Especially since the energy and gas markets were liberalised in the late 1990s, the Bundeskartellamt has protected competition in markets upstream and downstream of the energy networks, most notably the markets for the generation, trading and supply of energy to end customers.

Not to be confused with the monitoring of the energy markets under competition law is the new responsibility the Bundeskartellamt was given at the end of 2022 within the context of the laws on energy price relief.

Competition in the energy sector

Since the liberalisation of energy supply in the late 1990s, there has been a continuous surge of competitive activity in the electricity and gas markets. Competition is now present at almost all market levels of energy generation, trading and distribution. Consumers can choose from a variety of offers provided by various energy suppliers.

However, there is no competition when it comes to the electricity and gas networks. Energy networks are so-called natural monopolies. They are subject to regulation by the Bundesnetzagentur and the regulatory authorities of the Länder. This system ensures effective competition in the upstream and downstream markets.

The Bundeskartellamt protects competition in markets that are upstream and downstream of the energy networks. These markets cover in particular the generation, trading and supply of energy to end customers. The Bundeskartellamt intervenes by initiating merger control, cartel and abuse proceedings and carries out corresponding sector inquiries.

Energy monitoring

Together with the Bundesnetzagentur the Bundeskartellamt monitors developments in the electricity and gas markets (energy monitoring). Under Section 48(3) of the German Competition Act (Gesetz gegen Wettbewerbsbeschränkungen – GWB) the Bundeskartellamt monitors in particular the degree of transparency, including the transparency of wholesale prices, and the degree and effectiveness of liberalisation as well as the extent of competition on the wholesale and retail levels and on the energy exchanges. The results of their monitoring activities are published by the Bundesnetzagentur and the Bundeskartellamt in an annual report.

Report on market power in the electricity generation sector

The Bundeskartellamt’s current report of November 2024 finds that the electricity generation sector continues to be characterised by structural market power. The power plants of RWE, which is by far the leading supplier, were indispensable for meeting electricity demand during fewer hours than in the previous reporting period. However, the degree of RWE’s indispensability – that is, the periods in which it would be possible for RWE to systematically increase market prices – remained at a level exceeding the threshold for the presumption of a dominant position. For it to be possible for suppliers to systematically drive up prices in periods when their power plants are indispensable, and thus abuse their market power, they need to be able to predict these periods with sufficient accuracy. The Bundeskartellamt’s analyses have shown that RWE is able to systematically predict when its own power plants will be indispensable for meeting demand. The market power of the leading electricity producers is expected to have increased again since May 2024. In particular, since then, the domestic power plant capacities directly active in the market have decreased.

The report also describes the increasing significance for competition of electricity imports to meet demand in the German market, especially at times when little renewable energy can be generated from wind and solar power.

Moreover, the analyses show that pump storage plants are extremely important for positive secondary control power and that the concentration of suppliers is very high, with EnBW being the leading, and possibly dominant, supplier.

Market Transparency Unit for Wholesale Electricity and Gas Markets

The Market Transparency Unit for Wholesale Electricity and Gas Markets (MTU Electricity/Gas) has been set up at the Bundesnetzagentur. The tasks assigned to this unit are jointly carried out by the Bundesnetzagentur and the Bundeskartellamt. Their cooperation is defined in greater detail in a cooperation agreement (in German). The Federal Ministry for Economic Affairs and Climate Action can also issue a statutory instrument laying down more detailed provisions on data collection by the MTU Electricity/Gas. The MTU Electricity/Gas continuously monitors wholesale marketing and trading of electricity and natural gas. It also monitors the production of natural gas, the generation of electricity and the use of power stations. The unit’s mission is to ensure that wholesale prices are set transparently and competitively. This is also intended to raise the market participants’ confidence in the effectiveness of the energy markets. More information is available on the website of the MTU Electricity/Gas.

The Bundesnetzagentur and the Bundeskartellamt have published guidelines for the control of abusive practices in the electricity generation and wholesale trade sector in terms of antitrust and energy wholesale law (in German) explaining key provisions relevant to the work of the MTU Electricity/Gas. Further information on REMIT is available from the Bundesnetzagentur at remit.bundesnetzagentur.de. At least every two years, the Bundeskartellamt prepares a separate report on the conditions of competition in the electricity generation market (in German only).