Entega customers intend to claim damages in the amount of the price difference.

The gas suppliers Entega Vertrieb GmbH & Co. KG (Entega) and e-ben GmbH & Co. KG (e-ben) are two affiliates of HEAG Südhessische Energie AG (HSE) based in Darmstadt.

Entega is the leading gas supplier in the grid area of the HSE group, i.e. also in Darmstadt, Seligenstadt, Heppenheim, Wald-Michelbach and other municipalities. Entega is the dominant player in this market. From October 2006 to October 2009, Entega’s prices exceeded e-ben’s prices to a considerable degree.

Since October 2006, e-ben has offered gas only in the grid areas of GGEW AG (Bensheim) and Energieried GmbH & Co. KG (Lampertheim) as well as in Bürstadt at very reasonable prices. The difference between the prices offered by e-ben and Entega to customers amounted at times to more than 45% (energy price without tax, concession levy and grid fees).

Background of the “price discrimination” between Entega and e-ben was a dispute between the HSE group and GGEW AG and Energieried GmbH & Co. KG concerning electricity and gas distribution systems in Bürstadt and Seeheim-Jugenheim. These communities had de-cided that GGEW AG and Energieried GmbH & Co. KG were to take over these systems from HSE. HSE, being by far larger than these two suppliers and in which E.ON has a 40% share-holding, then founded e-ben thus combating GGEW and Energieried by offering extremely low prices.

This was to the detriment of Entega’s customers in the grid area of HSE, which still had to pay high prices. Two customers from Lorsch and Pfungstadt did not agree with this price policy demanding from Entega the same prices that e-ben was offering in Bensheim, Lampertheim and Bürstadt.

With its landmark decision dated June 23, 2009 (case no. KZR 21/08 and KZR 22/08), the Federal Court of Justice confirmed the legal opinion of those customers that were discriminated against. The legal dispute was, however, referred back to the Higher Regional Court Frankfurt/Main because there were still facts that needed clarifying. According to the ruling of the Higher Regional Court of Frankfurt of January 26, 2010 (case no. 11 U 12/07 and 11 U 13/07), Entega is prohibited from charging household customers prices that exceed e-ben’s prices by more than 5%.

The successful claimants intend to claim damages from Entega in the amount of the price difference between October 2006 and October 2009. Given the judgments made by the Federal Court of Justice and the Higher Regional Court of Frankfurt/Main this action is very likely to succeed. If all gas customers of Entega having sustained damage due to the price discrimination were to join this action, Entega would have to pay compensation to their gas customers in the millions due to the prohibited price discrimination.

For GGEW having supported the successful claimants from the beginning, these judgements were also a success. HSE’s attempt to drive small municipal competitors out of the market by offering considerably differing prices turned out to have a boomerang effect.

Meike Lüninghöner and Matthias Albrecht, lawyers of Becker Büttner Held, emphasize the far-reaching significance of these judgments: “These judgments are not only of significance for Entega’s customers, who may now claim damages from Entega in the amount of the difference between Entega’s and e-ben’s prices until the period of limitation.

With this prohibited price discrimination HSE was aiming to oust two small municipal companies, GGEW AG based in Bensheim and Energieried GmbH based in Lamperthein, using predatory pricing. Big energy groups regularly use similar strategies. If independent public utilities compete with big energy groups, they may expect predatory pricing strategies to drive them out of the market. This should be over now. On the basis of the judgments made by the Federal Court of Justice and the Higher Regional Court of Frankfurt/Main, affiliated groups can now be forced to offer everywhere extremely low prices, previously charged only in some areas.

The judgements made by the Federal Court of Justice of June 23, 2009 (case no. KZR 21/08 and KZR 22/08) are available for download on the website of the Federal Court of Justice (www.bundesgerichtshof.de). The judgments made by the Higher Regional Court of Frank-furt/Main of January 12, 2010 (case no. 11 U 12/07 and 11 U 13/07) have not been published yet.

Becker Büttner Held is a leading provider of consulting services for energy and infrastructure companies and their customers with a special focus on the municipal industry. BBH advises about 350 municipal utilities (Stadtwerke), energy companies of any kind, industrial enter-prises, investment firms etc. With important publications as well as numerous fundamental decisions and a path-breaking approach, BBH has managed to co-shape the development of the energy industry.

For further questions please do not hesitate to contact Matthias Albrecht and Meike Lüninghöner.

Best Regards,

Becker Büttner Held, Rechtsanwälte Wirtschaftsprüfer Steuerberater

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