Energy: Cartel Office: RWE still dominant in power generation

The Bundeskartellamt continues to assume that the energy group RWE is dominant in the electricity generation market.

Energy: Cartel Office: RWE still dominant in power generation

The Bundeskartellamt continues to assume that the energy group RWE is dominant in the electricity generation market. This emerges from the latest analysis of the competitive situation in electricity generation, the so-called market power report. According to this, RWE was still the largest electricity producer in Germany in the period under review from October 2021 to March 2023.

"In many hours, RWE is indispensable for covering the demand for electricity in Germany," said Andreas Mundt, President of the Authority, on Wednesday. The company is thus "clearly above the so-called assumption threshold for market dominance". The energy companies EnBW from Baden-Württemberg and Leag from Brandenburg came close to this threshold during the period under review.

RWE does not share the assessment

RWE stressed that they did not share the Cartel Office's assessment. "RWE is not responsible for the circumstances and the market environment that are supposed to justify an allegedly achieved dominant position," said the group. No new conventional power plant capacities have been built.

In fact, further nuclear and coal-fired power plants have been shut down since 2020 due to legal requirements. In the period under review, there were special effects, such as the activation of three power plant blocks from the security reserve in the fall in view of the feared energy crisis.

With the report, the Cartel Office does not formally establish a dominant position, Mundt emphasized. "Such a determination can ultimately only be made in the context of a specific individual decision." For the companies, specifically for RWE, exceeding the presumption threshold is a "strong indication" that they have to observe the prohibition of abuse with their market behavior. "The artificial shortage of electricity supply would be highly problematic under antitrust law." RWE operates several lignite and natural gas power plants in Germany. During the investigation period, electricity was also generated from nuclear power plants that have since been shut down.

The authority explained that the decisive factor for the competitive importance is whether and to what extent a provider is indispensable for the electricity demand. When demand is high and supply scarce - for example, when the sun isn't shining and the wind isn't blowing - indispensable suppliers could manipulate the price at these moments. Therefore, the market power in the electricity sector is measured according to how many hours a year a company is indispensable to cover the demand.

Electricity imports also examined

The Cartel Office explained that a dominant position in the market has decisive consequences for electricity producers. "In particular, they must not artificially hold back any generation capacity because this could manipulatively drive up the price in moments of shortage. That would be abusive." According to a spokesman for the authorities, however, there is no indication that RWE could have abused its market power during the period under investigation.

The Cartel Office also examined the influence of electricity imports. The conclusion of the head of the authorities: "Electricity imports will become increasingly indispensable in the future in order to keep the market power of the leading domestic suppliers in check." Foreign generation capacities are particularly important when domestic electricity generation from wind and sun is low, but electricity demand is high at the same time. "Without sufficient power imports in such moments of scarcity, the market power of domestic power producers would be even stronger."