As the cartel authority, the Ministry of Economic Affairs is intensively scrutinising water prices in Hesse. All water companies have a dominant market position in the end customer business. In contrast to economic sectors in which competition prevails, citizens and commercial customers cannot switch to other providers. The water supply companies therefore lack incentives to operate efficiently; rising costs can be passed on to customers. This monopoly is not only detrimental to customers, but to the economy as a whole.
In order to counteract this, the Ministry of Economic Affairs, as the cartel authority, has the power to prohibit excessive prices. To this end, Section 103 GWB old version - Act against Restraints of Competition - provides for the comparative market concept (planned for the 8th GWB amendment: Section 31 GWB new). This involves comparing a water supply company with other, similar suppliers. If it is too expensive, it must lower its prices. Under Section 103 ARC (old version), a decision by the Ministry of Economic Affairs as the antitrust authority is required to establish abuse. This is not the case with Section 19 GWB, which can now also be invoked following the "Wetzlar water prices" ruling by the Federal Court of Justice. This provision prohibits the abuse of a dominant market position. Customers can invoke this directly, i.e. without the Ministry of Economic Affairs as the antitrust authority issuing an abuse order, because it is a so-called prohibition offence.
The aim of antitrust law is to simulate competitive pressure on the monopolist and thus create an incentive to eliminate inefficiencies in the Companies. The considerable differences in water prices in Germany, which have not yet been explained to the necessary extent, show that this is urgently needed. The antitrust authorities of Germany and the federal states therefore decided as early as 1997/1998 to intensify the supervision of water prices [Resolution of the antitrust officers of Germany and the federal states of 18 September 1997].
The Ministry of Economic Affairs, as the cartel authority, only compares companies at the same market level (district water companies, end customer suppliers). At least five ideal-typical sample cases are currently used. These are type case 0 ("two-room flat", 80 m³ annual consumption volume), type case 1 ("single-family house", water consumption 150 m³ per year), type case 2 (400 m³ water consumption, "multi-family house"), type case 3 (700 m³ annual consumption) and type case 4 (960 m³ consumption per year), each with the smallest meter. Depending on the delivery structure, comparisons can also be based on smaller or larger sample cases. In addition to the type case analysis, the Ministry of Economic Affairs, as the competition authority, is increasingly determining a revenue cap, as was done in the Wetzlar II ruling [Wetzlar II, dated 23 December 2010, p. 2 of the ruling, point 2]. This makes it easier to check whether the price reduction order is being complied with by the supply company.
A water supply company against which antitrust proceedings have been initiated must justify its prices. To do so, the Companies must state and prove aspects that inevitably lead to higher prices. These include, in particular, an unfavourable territorial structure that makes the supply challenging and expensive. If the water company can fully explain the price difference in this way, the cartel proceedings are discontinued; otherwise, the Ministry of Economic Affairs as the cartel authority orders a price reduction by decree. An agreement on a voluntary price reduction is also possible [see the 2006 article "Wasserwirtschaft und Kundenschutz zwischen Anspruch und Wirklichkeit" and the 2010 article "Die Entscheidung des Bundesgerichtshofs vom 02.02.2010 "Wasserpreise Wetzlar" - neuere Entwicklungen des Wasserkartellrechts", there under V "Gleichartigkeit"].
There is a particular need for action in State of Hesse because the water prices in our federal state [comparison of charges of Hessian water suppliers] are very high in comparison with the western states - and in some cases they are even higher than those in the new federal states. For this reason, the Ministry of Economics, as the cartel authority, has for years been building up a comprehensive database with information from around 300 water companies throughout Germany; their prices and the structural data of selected companies are updated on a regular basis using a questionnaire [Questionnaire of the State Cartel Authority]. On this basis, water price reductions of up to 20 % have been agreed in six cases in recent years. These were the water companies HSE / formerly Südhessische Gas und Wasser AG in Darmstadt (1999), ESWE / Stadtwerke Wiesbaden (2001), Wasserverband Oberer Rheingau (2004), Stadtwerke Offenbach (2004), Kreiswerke Hanau (2005) and Stadtwerke Gelnhausen (2007).
Antitrust proceedings had to be initiated against water supply companies in nine cases due to suspected abuse. These were concluded in the cases of the water supply companies in Wetzlar (enwag), Frankfurt am Main (Mainova) and Kassel (Städtische Werke) with abuse injunctions (see below). The remaining six proceedings have not yet been concluded. These are the municipal utilities in Eschwege, Oberursel, Herborn and Giessen; in addition, administrative proceedings were most recently opened in 2009 against the companies ESWE Wiesbaden and HSE Darmstadt [press release dated 27 May 2009].
The audit of Energie- und Wassergesellschaft (enwag) in Wetzlar is regarded as a model case. enwag was instructed to reduce its water price by almost 30% in an order dated 9 May 2007. [Press release dated 14 May 2007; order dated 9 May 2007]. The Higher Regional Court of Frankfurt am Main (OLG) largely ruled in favour of the Ministry of Economic Affairs as the antitrust authority [OLG Frankfurt/M. decision of 18 November 2008 and press release of the same date]. On 2 February 2010, the Federal Court of Justice (BGH) confirmed the decision of the OLG and thus the decision of the Ministry of Economic Affairs as the antitrust authority in essence ["Wasserpreise Wetzlar" BGHZ 184, 168] [see 2010 article "Die Entscheidung des Bundesgerichtshofs vom 02.02.2010 "Wasserpreise Wetzlar" - neuere Entwicklungen des Wasserkartellrechts"]. By its own admission, the Federal Court of Justice has thus made a fundamental decision and explained that water companies have a special market position. This results in an increased risk of abuse. This applies to a large extent to the water industry, in which the pipeline owner has a natural monopoly. It was therefore a legislative objective to provide the cartel authorities with a "particularly effective instrument of supervision".
As a result, enwag refunded its customers overcharged fees. As the attempt to agree a permanent price reduction with enwag failed after the decision of the Federal Court of Justice, the Ministry of Economic Affairs, as the cartel authority, ordered another price reduction on 23 December 2010 (Wetzlar II, dated 23 December 2010), in this case by around 33% for 2009 and 2010 [Wetzlar II]. Immediate enforcement was ordered and confirmed by the Higher Regional Court of Frankfurt am Main on 3 March 2011 as far as the price reduction was concerned [urgent decision of 3 March 2011 and press release of 9 March 2011]. At the hearing in October 2011, the OLG proposed a settlement.
In addition to the injunctions against enwag, the Ministry of Economic Affairs, as the cartel authority, issued two further price reduction injunctions. On 10 December 2007, the utility company Mainova in Frankfurt am Main was ordered to reduce its water price by 37% [press release dated 11 December 2007, order dated 10 December 2007]. This was followed in April 2008 by an order against Städtische Werke in Kassel, which also had to reduce its prices by 37% [press release dated 11 April 2008, order dated 10 April 2008]. The Companies have lodged an appeal against these orders with the Frankfurt am Main Higher Regional Court, which has not yet been decided. As part of the investigations against Städtische Werke Kassel, the Ministry of Economic Affairs as the antitrust authority also issued an information order against the City of Kassel on 10 August 2009, which the Higher Regional Court of Frankfurt am Main confirmed in its ruling of 16 August 2010 [ruling of 16 August 2010]. The OLG thus confirmed the comprehensive right to information and investigation of the Ministry of Economics as the cartel authority.
In order to avoid misunderstandings, it should be noted that the review of water charges is the responsibility of the municipal supervisory authority, not the cartel authority. The latter is only responsible for monitoring water prices. Some large Hessian cities charge water prices, while others and in particular numerous smaller and rural water suppliers charge fees.
In some Hessian cities whose high water prices are or were criticised by the Ministry of Economics as an antitrust authority, fees are now charged instead of prices. In addition to Wetzlar and Giessen, these include Eschwege, Wiesbaden and Oberursel. The supply of water to end customers is a natural monopoly that requires effective and standardised control. The current situation is unsatisfactory. This means that there are different legal and economic standards for charges and prices. The Hessian state government is therefore in favour of amending the GWB. It sees this as confirmed by the results of a major event held on 9 May 2011 entitled "Water prices and charges - two separate worlds?" at the Hessian Ministry of Economics, Transport and Regional Development. The experts present spoke out in favour of uniform control of prices and charges [press release dated 9 May 2011 as well as presentations from the event and supplementary press release dated 6 Sept. 2011].
An overview of current developments up to 2013 can be found in the article by the responsible head of department at the state cartel authority for energy and water, which is also available for download.
