On December 28, 2020, the FCO published its second report on market power for the electricity generation sector (“Market Power Report”)[1] one year earlier than statutorily required, because the FCO considered the imminent phase-out of nuclear and coal energy could affect the position of the market leader RWE.

The FCO’s analysis of the competitive landscape from October 1, 2019 to September 30, 2020 confirmed the market definitions as set out in its first Market Power Report.[2] As per its first Market Power Report, the FCO relied on the Residual Supply Index (“RSI”), which quantifies whether an electricity provider is indispensable to meet demand, and presumed that an electricity provider is dominant if it is indispensable to meet the demand for at least 5% of the hours of one year. As in the previous report, the FCO found that RWE did not yet hold a dominant position in the generation and first time sale of electricity for general supply in Germany and Luxembourg. The FCO noted that the imminent phase-out of nuclear and coal energy will lead to a further decline in domestic generation capacity in the near future which may lead to shortages of supply capacities and may push RWE over the dominance threshold. The FCO considers publishing its next Market Power Report in 2021, also because it found that market conditions in the electricity markets (in particular, in the market for balancing power required to compensate for unforeseen fluctuations in the power grid) have changed very recently and a close monitoring and a full analysis of the new competitive conditions is required.

[1]              The Market Power Report is only available in German here; the accompanying FCO Press Release, December 28, 2020 is only available in German here.

[2]              FCO’s first market power report for the electricity generation sector of December 2019, available only in German here. See also German Competition Law Newsletter November 2019 – January 2020, p. 12 et seq., available here.