09 July 2015

German Federal Cartel Office starts sector inquiry into heating and water metering services

On 2 July 2015, the German Federal Cartel Office (FCO) announced that it has opened a sector inquiry into the German market for heating and water metering services provided in buildings in order to review competition in this area.  The FCO stated that the metering market is concentrated, as apart from small local providers, there are very few companies which offer their services nationwide.  Among the few companies active on a national level in this sector are Techem, Ista, Brunata-Metrona, and Kalorimeta.

Through this sector inquiry into heating and water metering services, the FCO seeks to obtain information about the current market situation and to detect any possible competition issues in that sector.  In particular, the FCO will focus on the intensity of competition in submetering, i.e. the consumption-based metering and billing of heating and water costs in buildings as well as the provision of the necessary metering equipment such as heating costs distributors or water and heat meters.

Thereby, the FCO will concentrate on the following issues in its competitive assessment:

  • Market structure, in particular barriers to entry which make the market entry of newcomers difficult or impossible.
  • Prices for and profits earned from submetering services, in particular any bargaining power of submetering providers in relation to property owners.

Moreover, the FCO will have regard to the fact that although tenants are not the direct contractual partners of the submetering providers, they bear the main part of the costs.  In its assessment, the FCO will also include possible improvements through technical enhancements, e.g. the possibility of remote meter-reading via a radio transmitter.

A spokesperson of the German Tenants Association (Deutscher Mieterbund) said there is a manifest and reasonable suspicion that prices for metering services charged to tenants in Germany are too high which is to the detriment of tenants.  The association assumes metering service providers are able to charge higher prices to tenants because landlords, as the service providers’ contractual partners, do not engage in finding the most competitive offer in the market because costs are borne by tenants.

A spokesperson of Techem stated that the company is confident that the sector inquiry will show there are no competition concerns in regard to the German market for energy and metering services as there is lively competition with more than 150 competitors offering their services in Germany.

In the course of the sector inquiry, the FCO will consult market participants active in the relevant sector.  After the evaluation of the replies concerning the issues subject to the inquiry, the FCO will usually present its findings in a report.  If it does so, the authority will invite interested third parties to comment on the report concerning the sector inquiry.  Moreover, the information contained in the report will become publicly available and further information gathered in the course of the proceedings might be exchanged within the European Competition Network.  Hence, they could be used for further proceedings by competition authorities in different countries.

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