Price reduction order against utility company lawful

In a decision pronounced on 2 February 2010, the Cartel Senate of the Federal Court of Justice (BGH) confirmed a price reduction order issued by the Hessian State Cartel Authority, which had obliged the water supplier of the city of Wetzlar, enwag Energie und Wassergesellschaft mbH (enwag), to reduce water prices by about 30% in 2007.

enwag supplies drinking water to household and small business customers in the city of Wetzlar. Since 1 January 2003 it has charged a price of € 2.35/m3 for the typical annual consumption of a single-family house and € 2.10/m3 for the typical annual consumption of a multi-family house. The Land cartel authority compared this price with the water prices of 18 other water supply companies throughout Germany and came to the conclusion that it was about 30% excessive. By order of 9 May 2007, it obliged enwag to reduce its prices accordingly for the period until 31 December 2008. The Higher Regional Court of Frankfurt am Main confirmed this order as lawful on appeal by enwag. enwag's appeal against this decision was unsuccessful.

According to the decision of the Federal Supreme Court, which is of fundamental importance for the control of abuse of water prices under cartel law, public water suppliers are subject to the stricter control of abuse under cartel law according to Section 103 (5), Section 22 (5) GWB as amended by the announcement of 20 February 1990. These provisions enable the cartel authority to establish price abuse by utilities by comparing them with the prices of similar utilities and require the company concerned to justify its higher prices. Although these provisions ceased to apply to electricity and gas suppliers in 1999, they continue to apply to water suppliers - as the Federal Court of Justice explained in more detail - contrary to enwag's view. As the decision also emphasises, their scope of application must not be restricted too much by placing excessive requirements on the determination of the similarity of the comparable companies. On the basis of these principles, the closer examination of the Hessian Cartel Authority's price reduction order did not reveal any error of law. enwag has not demonstrated any circumstances that could justify its higher water prices.

Insofar as the cartel authority - in order to make it easier for the affected customers to reclaim invoice amounts already paid - also stated that enwag's water prices had already been correspondingly excessive since 1 July 2005 - i.e. already before the order was issued - the decision was not valid. Like the lower court, the Federal Court of Justice assumed that the applicable law only authorised the cartel authority to intervene in the future, but not to take measures applicable to past billing periods.


Order of the Federal Supreme Court of 2 February 2010 - KVR 66/08

Lower court:

Frankfurt am Main Higher Regional Court - Order of 18 November 2008 - 11 W 23/07 (Kart)


Source: Press release of the BGH


Goldberg Attorneys at Law


Michael Ullrich, LL.M. (Information Law)

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