Important BGH Judgement on Obligation to Transfer Ownership Following Change of Concession for Electricity Grid and Nullity of Concession Agreement

The Cartel Senate of the Federal Court of Justice (Bundesgerichtshof – BGH) delivered an important ruling clarifying the obligation of a former concessionaire who operated an electricity distribution grid on land owned by the town Homberg to transfer ownership of the installations to a new concessionaire under Section 46 German Energy Act (EnWG) as applicable until 3 August 2011. The new concessionaire, a company in which the town of Homberg holds a stake, had been awarded the right to operate the grid by the town. Despite an interpretation of the old version of Section 46 EnWG that was favourable for the new concessionaire BGH upheld a judgement by the prior instance to revoke a decision for abusive practice (Missbrauchsverfügung) by Federal Network Agency (BNetzA) against the former concessionaire, ordering him to transfer ownership. BGH argued the new concession agreement was void as the concession was awarded in an intransparent manner.

BGH ruled that

  • Despite the somewhat ambiguous wording Section 46 para. 2 sent. 2 EnWG as applicable until 3 August 2011 mandated that the former concessionaire had to transfer owner ship of the installations for distribution necessary for the operation of grids for the general distribution within a municipal district in return for payment of an adequate consideration following a change of concession;
  • The obligation to transfer ownership under Section 46 EnWG (old version) covered medium voltage cables if “(large) customers were connected as end  customers”;
  • Section 65 EnWG based on which the Federal Network Agency (BNetzA) issued an order for abusive practice (Missbrauchsverfügung) against the former concessionaire gave BNetzA broad discretionary power (weites Ermessen). BGH also stated that prosecution of a breach of the EnWG was generally in the public interest.
Yet BGH held that the decision for abusive practice issued by BNetzA against the former concessionaire was void as it lacked a legal basis. The concession agreement between the town of Homberg and the new concessionaire, a company in which the town holds a stake, was void as it was concluded in an in transparent manner violating the rights of the old concessionaire under Section 20 of the Act on Restraints of Competition in the former version applicable in the case.

The case demonstrates that one can still lose court battles despite important wins in certain areas. The question whether Section 46 para. 2 sent. 2 EnWG old version required a transfer of ownership of grid installations following a change of the concessionaire had been a contentious issue for a long time.

Please note that Section 46 para. 2 sent. 2 EnWG in the currently applicable version is no longer as ambiguous as the former version on which BGH ruled. It clearly states that as a rule the former concessionaire has to transfer ownership of the installations for distribution necessary for the operation of grids for the general distribution within a municipal district in return for payment of an adequate consideration. The new concessionaire can choose to be granted (only) the use of the installations instead.

The decision to declare void the concession agreement between the town of Homberg and the company in which the town holds a stake on grounds of intransparency follows the judgement in other cases recently decided by the Cartel Senate (please see first link below).

Source: Federal Court of Justice, ref. no. EnVR 10/13

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