The Bundeskartellamt objects to abusive practices of a municipality in the award of rights of way for electricity and gas networks

In a decision issued today the Bundeskartellamt has established that the municipality of Titisee-Neustadt acted abusively in awarding rights of way for electricity and gas networks. The municipality was ordered to carry out a new, non-discriminatory award procedure.

Andreas Mundt, President of the Bundeskartellamt: "In the interests of all consumers, municipalities should choose the network operator that submits the best offer. This can be their own municipal utility, but the utility must acquire the concession in a non-discriminatory selection procedure."

As contracts concluded in the 1990s will expire in the next few years, several thousand concessions for the operation of electricity and gas networks throughout Germany will have to be newly awarded. A trend towards remunicipalisation can be observed. In individual cases municipalities have tried to give their own utilities preference in the award decision. However, the legal criteria which have to be complied with in the award of new contracts rule out such preferential treatment.

According to the case law of the Federal Court of Justice, municipalities act as entrepreneurs in the award of rights of way and, as the sole owners of these rights, have a dominant position in the market. A precondition for the operation of electricity and gas networks is being granted rights of way. These rights must be re-awarded every 20 years.

In the Bundeskartellamt's view the municipality of Titisee-Neustadt abused its dominant position by carrying out a discriminatory selection procedure, giving preference to one specific bidder without any objective justification, applying inadmissible and unlawful selection criteria and violating the principle of secret competition and the prohibition to agree or grant other benefits than those admissible under the German Ordinance on Concession Fees for Electricity and Gas (KAV).

Andreas Mundt: “In several decisions taken by the Federal Court of Justice in 2013 and 2014, the court clarified which selection criteria are admissible and which principles are to be observed in the selection procedure. The court also held that this did not violate the guarantee of self-government for municipalities under the German Basic Law."

The municipality of Titsee-Neustadt had applied for a suspension of the proceedings as it had filed a municipal constitutional complaint regarding the rules on the award of concessions. The Bundeskartellamt refused to suspend the proceedings as the Federal Court of Justice and all higher civil and administrative courts that had dealt with such concession awards had expressly held that the guarantee of municipal self-government was not violated. Also, the Federal Constitutional Court had not even accepted a municipal constitutional complaint filed by the town of Heiligenhafen in 2013.

Now that the proceeding has been concluded by the authority's prohibition decision, only one abuse control proceeding against the federal state of Berlin regarding the award of concessions is pending at the Bundeskartellamt. As the basic framework conditions for selection have been clarified by the Federal Court of Justice, the Bundeskartellamt has received hardly any new complaints in this respect.

The municipality of Titisee-Neustadt can appeal against the Bundeskartellamt’s decision to the Düsseldorf Higher Regional Court.