The German Federal Cartel Office has confirmed initial suspicions of unlawful price adjustment clauses in four district heating networks following an investigation into alleged abusive pricing practices by municipal utilities and district heating suppliers.
The proceedings, which commenced in late 2023, focus on significant price increases between 2021 and 2023 and are part of a broader effort to ensure fair competition and consumer protection in the sector.
The authority is examining the specific application of price adjustment clauses across nine district heating networks. Preliminary findings suggest that in four of these networks, pricing mechanisms may have disadvantaged consumers by not complying with legal requirements. The investigation continues for all nine networks, and affected suppliers will have the opportunity to present their responses before final conclusions are drawn. However, for procedural reasons, the Federal Cartel Office has withheld the names of the companies involved.
Monopoly Concerns and Regulatory Needs
Andreas Mundt, President of the Federal Cartel Office, emphasized the monopolistic nature of district heating suppliers, noting that consumers are unable to switch providers. As a result, these suppliers are subject to strict antitrust regulations prohibiting abusive pricing practices. Mundt highlighted the necessity for greater regulatory oversight in the district heating sector, pointing to the need for transparency in pricing and cost structures, clear legal pricing guidelines, and stronger antitrust enforcement to prevent abuses.
“District heating suppliers hold monopoly positions in their respective network areas, making regulatory oversight crucial,” said Mundt. “Our preliminary findings indicate the need for more intensive scrutiny in this sector. While comprehensive regulation of all networks would be difficult, improved legal frameworks and transparency measures would enhance long-term market control.“
Legal Requirements and Findings
The investigation centers on compliance with the Ordinance on General Terms and Conditions for the Supply of District Heating (AVBFernwärmeV). According to legal stipulations, price adjustment clauses must consider both cost developments for district heating generation (cost element) and the broader market conditions (market element). These two elements must generally be given equal weight under the Federal Court of Justice’s case law.
The Federal Cartel Office’s preliminary assessment found that in four networks, the market element was underweighted in pricing formulas, contrary to legal requirements. Additionally, in at least three of these networks, suppliers’ cost calculations did not accurately reflect actual heat generation or procurement costs. Certain cost-reducing factors were not accounted for, leading to higher-than-allowed price increases during the examined period.
Consumer Legal Recourse
Beyond the Federal Cartel Office’s investigation, individual district heating customers have the right to challenge potential violations through civil litigation. Section 24 Paragraph 4 of AVBFernwärmeV allows private consumers to contest unlawful price adjustments and seek remedies through legal channels.
The Federal Cartel Office will continue its proceedings and review responses from the suppliers involved before issuing final decisions. The outcome of this investigation could set a precedent for future regulatory actions in the district heating sector, reinforcing consumer protections and fair market practices.Germany Probes Illegal District Heating Price Hikes
