RWE group’s participation in municipal utilities could only be cleared subject to conditions and obligations

The Bundeskartellamt has cleared four further participations by RWE Rhein-Ruhr AG which belongs to the RWE group of companies. However, clearance was only granted subject to conditions and obligations. The projects concerned involve the acquisition of 20 per cent of the shares of both Wuppertaler Stadtwerke AG and Stadtwerke Velbert GmbH, 25 per cent of the shares of Stadtwerke Remscheid GmbH and, in addition to the 50 per cent stake already held, a further 40 per cent of the shares of Energieversorgung Oberhausen AG.

The examination has shown that the mergers are likely to result in a strengthening of dominant positions in the national and local markets for electricity and gas sales. They could thus not be cleared without conditions and obligations suitable to at least balance out the disadvantages of the increased market dominance. In a countermove RWE committed itself to sell its 40 percent share in the municipal utility Stadtwerke Leipzig GmbH before putting the projects into effect. Stadtwerke Leipzig can thus establish itself as an independent purchaser in the market for electricity distribution – without a partner interested in supplying electricity itself. At the same time RWE must part with its 20 percent stake in Stadtwerke Düsseldorf AG within a set period of time after the projects have been put into effect. This sale can possibly also be carried out by an independent trustee. Following its consideration in which it took account of both qualitative and quantitative aspects the Bundeskartellamt has concluded that the negative effects expected from the concentrations will be outbalanced by positive effects likely to result from the compensations offered.

The President of the Bundeskartellamt, Dr Ulf Böge, stated: “The Bundeskartellamt is concerned about the high level of concentration and the increasing scope for raising prices in the electricity sector. The authority will therefore not allow further market foreclosures to take place, particularly those caused by participations of the large grid companies in municipal utilities and regional providers. In deciding not to clear the RWE group’s planned participations without adequate compensation the authority underlines this view.”

Dr Böge went on to say: “When it comes to compensating for anti-competitive effects of a planned participation in municipal utilities, it is of primary importance to relinquish participations in other, at least equivalent public utilities. It is this form of compensation which is most likely to make a reliable comparison of anti-competitive and pro-competitive effects possible.”