Bundeskartellamt warns water provider Berliner Wasserbetriebe against charging excessive drinking water prices

Today the Bundeskartellamt has issued a statement of objections to the water provider Berliner Wasserbetriebe (BWB) for charging abusively excessive prices for drinking water. In its preliminary legal assessment the Bundeskartellamt has concluded that water prices in Berlin in 2012, 2013 and 2014 will have to be reduced by on average approx. 19% compared with those charged in 2010. This is based on the net returns per sale, i.e. on the average prices per cubic metre across all tariffs and excluding taxes and duties. Compared with 2010 this would mean a fall in sales returns of approx. € 205 million for the next three years, which would directly benefit Berlin water customers.

The parties now have the opportunity to comment on the Bundeskartellamt's statements and the planned price reduction. A final decision is envisaged for the beginning of 2012.

Andreas Mundt, President of the Bundeskartellamt, stated: "Water supply is one of the last large monopolies in Germany. The proceedings against Berliner Wasserbetriebe show how important it is for us to monitor competition in this sector. Competition authorities have to be able to exert strict control over all water providers across the country. It is absolutely immaterial to the consumer whether he pays for water in the form of prices or charges. However, this factor is currently crucial for competition control. The legislator is called upon to end this division of control."

Berliner Wasserbetriebe are Germany's largest water provider which is responsible for water supply and waste water management in Greater Berlin. BWB charges prices under private law, which means that competition law is applicable. Water providers have a monopoly position in Germany because customers cannot switch to other providers. In Berlin this natural monopoly is also legally protected by way of compulsive connection and use.

The proceedings against BWB were opened in March 2010. The Bundeskartellamt subsequently carried out extensive investigations into urban water supply and requested the relevant data from every town or city in Germany with a population of more than 200,000 (in all 38). Finally, the authority took the prices of water providers in Hamburg, Munich and Cologne as a benchmark for the water prices in Berlin as the conditions of supply in these cities are comparable in structure with those in Berlin. It discovered that BWB's sales returns were significantly higher than those of the water providers in the other three major cities.

In the course of its investigations the Bundeskartellamt examined in detail costs and conditions of supply in the different cities. In particular, it looked at the costs involved in the supply of the very good quality of drinking water in Germany. All the water providers undertake every effort to guarantee this high quality. In the authority's view, necessary expenditure in this area is no higher in Berlin than in Hamburg, Cologne or Munich. Berlin has ample resources of premium quality water which is easily accessible. Water distribution conditions are also very favourable in Berlin.

However, the Bundeskartellamt has also taken into account BWB's investment costs for redeveloping the East Berlin water supply network. In the years following reunification, BWB invested more in water supply facilities than the comparable companies in Hamburg, Munich and Cologne which had no comparable network areas which were in need of redevelopment. The additional investment still has some impact on the water price due to long-term depreciation. The Bundeskartellamt therefore intends to acknowledge all of BWB's additional investments in this respect and their price-increasing effects.