New floating LNG terminals are part of the solution to replace discontinued Russian gas supplies for the upcoming winter period in Germany. That is why the Federal Ministry for Economic Affairs and Climate Action had agreed with gas wholesalers Uniper, RWE and EnBW/VNG to jointly set up and operate LNG terminals in Brunsbüttel and Wilhelmshaven in August 2022, subject to clearance from a competition law perspective. The German FCO now gave its green light: The joint operation of LNG terminals, especially their exclusive use by Uniper, RWE and EnBW/VNG excluding other gas importers and wholesalers, according to the FCO is in line with competition laws.
The FCO’s assessment is based on the following conditions:
- The collaboration is set up for a limited period until 31 March 2024 and all companies will have to make full use of their supply slots during this time.
- The parties will continue to procure liquid gas independently of one another on the world market.
- The marketing of the imported gas will also be carried out separately.
- The “obvious and substantial” benefits for consumers - namely the supply of urgently needed gas at lower costs - outweigh any negative effects on competition.
The FCO with this announcement again demonstrates its growing crisis management expertise. It had just recently allowed collaboration of German sugar manufacturers because of gas shortages. The FCO now again very pragmatically clears cooperation between competitors with a view to the continuing energy crisis based on the Ukraine war.
What can we learn from this? We had already assumed that the decision on the sugar collaboration could be a blueprint for similar constellations. Again, the circumstances and background of this case are very specific and not automatically transferable to competitor collaborations in general. However, we can see that the authority is willing and able to react quickly and pragmatically in times of crisis if competitor collaboration is temporary and there are important consumer benefits – both criteria which can also easily apply to another long-term crisis, i.e. climate change. Therefore, again this approach of the FCO can and should be very closely followed in the larger ESG context. We can therefore say, to be continued…
FCO president Andreas Mundt: “The advantages for consumers […] outweigh any negative effects on competition. In normal times the cooperation between these three very important gas importers and wholesalers and especially the exclusive use of import capacities at the terminals would possibly have to be assessed more critically.”