Bundeskartellamt examines district heating sector

The Bundeskartellamt has launched a sector inquiry into the district heating sector in Germany and within the past few days has sent decisions requesting extensive information to 30 district heating suppliers. Around 5 million households in Germany are supplied with district heating. Proportional to the various forms of heating provided, district heating ranks third place (13 %) behind natural gas (approx. 48%) and heating oil (approx. 30%). The annual household consumption of district heating, weather depending, amounts to around 80 billion kilowatt hours.

The sector inquiry was initiated because within their distribution networks, district heating suppliers have a monopoly position which is often legally protected by compulsory connection and use. Such a situation creates a scope for setting prices, which would not be possible in a competition situation. District heating customers basically have no possibility to switch to another supplier or heating system for legal or practical reasons. They are generally “held captive” and therefore merit special protection.

With the sector inquiry, which covers the years 2007 and 2008, the Bundeskartellamt hopes to create more transparency in price and structure in the district heating markets. A comparative analysis, for example, is intended to identify which companies are particularly expensive and which are particularly low-priced. In this analysis the Bundeskartellamt will take distribution networks and the type of energy generation into consideration. Should this company comparison raise the initial suspicion of a cartel law infringement, the initiation of proceedings by the Bundeskartellamt or the competition authorities of the Länder is possible.

The criteria used for selecting the companies for the inquiry were size, number of customers and shareholder structure. Geographical and local infrastructure criteria also played a role. As pricing structures in the district heating sector are much less transparent than in the gas or electricity sector, the absolute price level could not be applied as a selection criterion.

The legal basis for the inquiry is Section 32 e of the Act against Restraints of Competition. Accordingly, the Bundeskartellamt may examine a specific sector of the economy if circumstances suggest that competition is restricted in this sector in Germany. These sector inquiries are thus not targeted against individual companies.