By decision of 15 May 2012, recently published, the German
Federal Court of Justice ("the Court") annulled a
decision of the Higher Regional Court of Stuttgart
("HRCS"), by which the latter had annulled a decision of
the federal cartel office ("FCO") finding that a dominant
water supplier had imposed excessive prices on its retail
customers. In its decision, the Court clarified that a finding of
excessive pricing within the meaning of Section 19(4)(2) of the
German Act Against Restraints of Competition ("GWB") was
not limited to comparing the dominant undertaking's prices to
those of undertakings in comparable markets where effective
competition prevails, but could also be assessed by taking account
of the dominant undertaking's pricing elements.
In February 2011, the FCO ordered the water supplier to lower
its base price for water and not to apply a net price exceeding a
certain level. The FCO had based its finding of excessive pricing
exclusively on the examination of the pricing elements that had
been applied by the dominant water supplier, and had concluded that
prices would have been different if a comprehensible and
appropriate pricing procedure had been applied. According to the
FCO, such appropriate procedures could be derived from, e.g., the
German Electricity or Gas Grid Ordinances. The FCO did not,
however, compare the dominant water supplier's prices to those
of water suppliers on comparable, competitive markets.
The FCO's decision was annulled by the HRCS, which found
that the method comparing a dominant undertaking's prices to
those of undertakings in comparable markets had priority over the
cost-based approach taken by the FCO.
The Court, in turn, rejected the HRCS's approach, upholding
the FCO's original finding. The Court held that, for the
determination of excessive pricing, factors other than the
comparison of prices between undertakings in comparable markets
could also be examined. According to the Court, the application of
a different method could in particular be appropriate where no
comparable markets with effective competition existed. As regards
the method applied by the FCO to examine the dominant
undertaking's pricing elements, the Court held that
uncertainties in individual cases could be taken account of by the
use of safety margins in making pricing calculations.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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