German Gas Competition is Working
Germany's federal cartel office on Tuesday said the gas market had started developing enough dynamism for it to stop intervening, in a move that was cheered by market leader E.ON Ruhrgas but criticised by market newcomers' group BNE.
The Bonn-based authority said in a statement it had decided against lengthening measures to restrict long-term supply contracts beyond Sept. 30, as curbs put in place previously helped change the market infrastructure for good.
The measures had initially stopped restrictive practices going back to monopoly times by shortening the time customers were tied to individual suppliers and cutting the percentage of total volume they were required to buy from leading companies.
"Via these decisions we broke up long-term supply practices and gave a decisive boost to more gas market competition," it quoted the office's president, Andreas Mundt, as saying. "Due to the now recognizable positive market changes, there is no more need for an extension of these rulings."
An evaluation by the office had shown that former incumbents such as E.ON Ruhrgas, VNG, RWE and Wingas had modified their contracts and lost some influence.
The office said it polled some 100 customers such as local utilities and big industry, who mostly agreed they were now benefitting from more diverse gas contract choices, product ranges and suppliers, which enabled them to wield more power.
The curbs were put in place in 2006 as the office started investigating a handful of leading firms between 2006 and 2008.
"The cartel office allows all parties more flexibility to ensure a supply to German customers that is secure, tailored to their needs, and competitively oriented," E.ON Ruhrgas said.
The E.ON group has been playing a strong role in boosting trade at virtual gas hubs, streamlining delivery areas and marketing storage and transport services. But BNE, which represents new operators without pipelines of
their own and units of gas firms headquartered outside Germany, called the move premature, unfair and stifling.
"Long-term contracts gag gas distributors and tie them to dominant gas suppliers," BNE said.
