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The following OECD assessment and recommendations summarise chapter 5 of the Economic survey of Germany published on 9 April 2008.
Strengthening product market competition in some network industries would help to increase productivity and reduce prices for consumers
Strengthening competition in network industries could help Germany to raise productivity in these sectors and beyond, since they produce important services for other parts of the economy. It would also help bring down prices, which are high by international comparison in the energy sector. Both the energy and railways sectors are dominated by large vertically integrated incumbent companies which operate the networks, giving these companies considerable scope to make market entry for their competitors cumbersome and costly. Unbundling requirements exist in both sectors, but they are weak as the network access provider is not completely vertically separated from the dominant market incumbent. The Federal Network Agency has the task of guaranteeing network access on fair conditions. However, strengthening the separation between network access provision and potentially competitive services will be critical to making these markets more competitive.
Retail energy prices
Note: All prices exclude all taxes and refer to 1st January 2007.
In the energy sector, Germany has opted against full ownership unbundling, partly because market incumbents are privately owned and forcing them to sell their network assets could involve thorny legal problems. However, recent experience has shown how difficult it is to enforce operational and informational unbundling between affiliates that share an interest in maximising joint profits. Against this background, Germany should consider stronger forms of vertical separation, including the option of full ownership unbundling and establishment of an independent system operator that operates the network without ownership of the assets themselves. The gas market in particular is currently much segmented with market areas delineated along network property lines. This increases possibilities for network owners to discriminate against competitors and makes market entry cumbersome and costly for newcomers. The authorities should consider integrating market areas across the networks of different owners. This could lead to an independent system operator, because different owners would have to join forces for network operation, making it more neutral. In addition, it will be necessary to reduce concentration at the wholesale level by fostering market integration with neighbouring countries and market entry of newcomers.
In the railway sector, the choice of model of the envisaged privatisation of the market incumbent, Deutsche Bahn AG (DB AG), will be important for the development of competition going forward. In light of the difficulties in enforcing sufficient independence of network operation in a market with private vertically integrated companies, Germany should choose a privatisation model with a strong separation between track ownership and operation, on the one hand, and transport services on the other. Retaining full ownership of the tracks would allow the government to sell its full stake in transport services, thus disentangling its conflicting roles as a shareholder of DB AG, a regulator and a buyer of transport services. In addition, there are indications that tenders have significantly brought down the associated costs for state governments and the government should further strengthen competition by accelerating the process of mandatory tendering lines that are dependent on subsidies.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.
Eine Druckversion des Policy Brief in deutsch (pdf Format) kann ebenfalls heruntergeladen werden. Es enthält die Gesamtbeurteilung und die Empfehlungen, aber nicht alle oben gezeigten Grafiken.
The complete edition of the Economic survey of Germany 2008 is available from:
For further information please contact the Germany Desk at the OECD Economics Department at firstname.lastname@example.org. The OECD Secretariat's report was prepared by David Carey, Felix Hüfner and Nicola Brandt under the supervision of Andreas Wörgötter. Research assistance was provided by Margaret Morgan.