Charging points too pricey? Final report of the sector enquiry into charging infrastructure

The fast-growing market for charging infrastructure is currently in the regulators’ sights. At European level, the EU’s Alternative Fuels Infrastructure Regulation (“AFIR”), which recently came into force, has attracted attention. The Regulation contains detailed rules on pricing for electricity at charging points and terms of access for third parties (see our article here). On 1 October 2024, Germany’s Federal Cartel Office (“FCO”) published its eagerly awaited final report of the sector enquiry on charging infrastructure (Sector enquiry into the provision and marketing of public EV charging infrastructure, file number B8-28/20). The final report throws into sharp relief the antitrust-related legal challenges of the charging infrastructure market, which may create a stumbling block to the successful use of electric vehicles in Germany.

A. Why and how was the sector enquiry carried out?

The sector enquiry launched back in July 2020 was intended to pinpoint structural competitive shortcomings in public charging infrastructure as expressed in complaints by consumers and market players. The enquiry primarily examined geographical access for the creation of charging infrastructure and the effects of that access on competition between charging point operators (“CPOs”) plus the evolution of competition at charging point operation level and issues of access by electric mobility providers (“EMPs”). The FCO compiled and analysed a large amount of information from companies at the various market levels (motorway services operators, CPOs and EMPs) and regional authorities (city and district councils).

B. Key findings of the sector enquiry from an antitrust perspective

Alongside detailed explanations of the mostly locally definable markets, the FCO essentially identified the following competitive shortcomings and put forward specific solutions and recommendations.

I. Access to areas suitable for installing public charging points

While the FCO could not find any hurdles to competition in respect of access to privately owned land to install charging points, the current practice of granting access to public areas to install charging points is a “considerable obstacle to competition”, it said. Many regional authorities often award suitable areas exclusively or preferentially to their own utility companies or to an individual CPO, according to the FCO. This prevents open, non-discriminatory market access, it continued. When a regional authority grants access to its own utility company as a direct competitor of the CPOs, this means the authority is playing multiple roles itself, the FCO concluded.

By putting to tender the federal government’s own sites at motorway rest stops without catering, as part of the Deutschlandnetz (Germany Network), the market conditions were essentially much better, according to the FCO, even if the federal government was still the sole provider. At motorway services with catering, however, due to longstanding concession agreements the Tank&Rast Group was virtually the only site provider to the CPOs, it said.

The FCO assumes that the regional authorities, when granting access to public areas, do not act merely in a governmental capacity, and must therefore observe both the prohibition of misuse of a dominant market position (Section 19 of the German Act against Restraints of Competition – “ARC”, Article 102 TFEU) or of relative or superior market power (Section 20 ARC) and the ban on anti-competitive agreements (Section 1 ARC, Article 101 TFEU). Of course, this also applies to the private-sector Tank&Rast Group, the FCO said. The prohibition of misuse bans in particular abusively refusing access or making access difficult to key infrastructure for operating in a downstream market, including by designing the access terms. By contrast, unlawful sharing of information (as in a hub-and-spoke setup) or vertical agreements (such as exclusivity agreements) between providers of suitable sites and CPOs could be covered by the ban on anti-competitive agreements. If regional authorities themselves were to act as CPOs via their own utility companies, as public sector bodies they would also be subject to special duties to consider third parties. Each case would need to be examined individually, but there would be a high risk of breaching antitrust law, the FCO concluded.

II. Competition among CPOs

The FCO presumes (partly based on the procurement practice described) that there is a high concentration of suppliers at CPO level in the numerous local markets. Many of the CPOs are vertically integrated and also operate as EMPs. Due to their high market power, CPOs have an incentive to enforce higher prices due to the EMPs’ lack of alternatives. Vertical integration also increases the risk of competitors being unfairly hindered or even displaced. The FCO referred to cost-prize squeezes, in that the prices paid by competing EMPs for charging current are set so high in relation to their own end customer prices that they are left with no adequate margin. However, there was no general indication of systematically excessive prices, systematic breaches of antitrust law or a systematic competition problem stemming from the refusal to grant competing EMPs access to charging infrastructure. But the FCO added that the design of the access terms for EMPs was a significant potential obstacle to competition which could ultimately result in excessive prices for end users.

In terms of antitrust law, this could be countered in particular by applying the antitrust law prohibition of abusive practices, again depending on the individual case. However, the prerequisite is always to identify a dominant position or relative market power. Due to the narrowly definable local markets, EMPs may also depend on relatively small CPOs.

C. Additional findings by the FCO

In addition to instruments under antitrust law, the FCO is also discussing the transmission model familiar from the electricity market. This model is to be applied in the current tender for rapid charging network for trucks. According to the transmission model, EMPs would be entitled to have the electricity from a provider of their choice transmitted and discharged at the charging point. The EMPs would thus not be dependent on the CPOs’ procurement prices passed on with a margin. The FCO does not think the conditions are in place for this type of right to transmission. This is because unlike in the electricity grid, the charging points are precisely not a natural monopoly. And it is not certain that this type of transmission model would really lead to lower prices for end users either. It will be interesting to observe whether the Federal Ministry of Transport retains the transmission model in its tender despite the FCO’s reservations.

The FCO is also considering the prohibition of discrimination now set out in Article 5(3) AFIR. According to this rule, the CPOs shall not discriminate, through the prices charged, between EMPs and end users. The same applies according to Article 5(5) AFIR to the prices charged by EMPs to end users. This particular prohibition of discrimination applies regardless of whether the CPO or EMP has a dominant market position or relative market power and thus goes beyond the standard prohibition of misuse in antitrust law. In this context the FCO points out that the practical application must be in line with antitrust standards. But it rejects stricter rules on pricing. In particular, with regard to any possible failure of regulation, the FCO states that there should be no specific price ranges as originally planned for in the Deutschlandnetz. This does not affect the obligation for CPOs und EMPs in Article 5 AFIR to charge “reasonable” prices which should not exceed the costs incurred plus a reasonable profit margin.

Regarding the widespread call for greater transparency obligations to be placed on CPOs, the FCO notes that price transparency is ambivalent by nature. While on the one hand it allows end users to compare prices more easily, such availability of information also furthers coordinated practices between market players, which may ultimately be harmful to competition.

D. Outlook

Unsurprisingly, the FCO’s final report describes numerous obstacles to competition in the dynamic market for public charging infrastructure which were already tangible in the sector enquiry’s status report in October 2021. As the charging infrastructure grows, we are likely to see more official antitrust proceedings in future and private lawsuits under antitrust law for access to charging infrastructure or changes to access terms. In addition to the general antitrust provisions, there will be specific regulations affecting the charging infrastructure, such as the prohibition of discrimination laid down in the AFIR. It remains to be seen how these rules will interact and influence the industry in future.