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Cartel Accusations

DW staff (jam)November 5, 2007

The EU antitrust office has evidence that four German energy giants colluded in secret meetings to agree on strategy, markets and supplies, according to German newsmagazine "Der Spiegel."

An electricity meter
Big energy players are accused of manipulating markets, and perhaps even pricesImage: AP

The magazine report, based on an investigation carried out last year by the EU's competition office, said that E.ON, RWE, EnBW and Vattenfall has been acting like a cartel for years, suppressing competition in the energy market.

The directors of the four companies, which control about 80 percent of Germany's electricity market, are said to have held secret meetings with each other where they discussed corporate information and made agreements on strategy.

E.ON's CEO Wulf Bernotat
E.ON's CEO Wulf Bernotat is thought to have been a part of the secret meetingsImage: AP

The EU report said Germany's biggest energy provider, E.ON, had tried to "substantially influence" electricity prices.

The gas sector has also been a target of anti-competition probes. In Brussels on Monday, Nov. 5, the EU Commission opened proceedings against RWE, Italy's ENI as well as E.ON and Gaz de France because of unfair competition practices.

An OECD report from 2006, entitled "Sustained Competition is Absent in Energy Markets," found that the liberalization of energy markets in 1998 did not result in sustained reductions in prices. The report said that pre-tax retail prices for gas and electricity in Germany are among the highest in the EU, especially for small business and private customers.

Raids in 2006

The information in the Spiegel article is based on the results of an investigation conducted by the EU's antitrust office, headed by Nellie Kroes. In May, June and December 2006, investigators conducted surprise inspections of Germany's biggest energy players. They confiscated files and computers and made copies of meeting minutes, strategy proposals and internal e-mails.

THe EU's antitrust chief, Neelie Kroes
EU antitrust chief Kroes isn't afraid of the big guys -- Microsoft and now Germany's energy giantsImage: AP

While the probe is not yet complete, the 60,000 pages of compiled documentation have painted investigators an increasing sharper picture of a group of German energy giants which appear to have contravened competition and anti-trust laws for a period covering 2003 to 2006.

"Instead of competing with each other, the four big suppliers agreed on strategies, prices and supply regions with the consent, or even at the orders of the bosses," the EU report said.

The cooperation appeared to have worked so well, the report added, that the invitation list to the secret meetings was expanded to include members of other European energy companies, including firms from Belgium, France and Italy.

Strong denials

For their part, the energy concerns have vehemently denied the accusations.

A multiple-outlet extension cord
Energy market liberalization has not brought prices down substantially in GermanyImage: picture-alliance/ dpa

"E.ON has at no time and in no fashion manipulated electricity prices or held conversations with competitors that could limit competition in the electricity and gas markets," said the company in a statement.

Germany's number two energy supplier, RWE, rejected the report's conclusions, saying that all the documents that had been confiscated by the EU antitrust office had been carefully analyzed by external lawyers.

"In the process, no improper agreements violating antitrust rules could be identified," the company said.

Germany's Environment Minister Sigmar Gabriel has demanded a close review of the accusations. Speaking Monday morning in Berlin, he said it was up to antitrust officials to carry out the review.

He said politicians could only encourage more competition in the energy sector and he called on consumers to carefully check their energy bills and consider switching providers.