Berlin Robert Habeck (Greens) could not be present at the presentation due to short-notice changes in the schedule. But the more than 300-page long main report by the Monopolies Commission is guaranteed to end up on the Minister of Economics’ desk. Habeck will read most of the pages with goodwill, the competition authorities have a lot of praise for his agenda. However, Habeck will not like a central part of the report, which is published every two years.
The Monopolies Commission describes Habeck’s plan to siphon off excess profits from companies as “dispensable”. That would not necessarily have to bother Habeck. The federal government is not bound by the advice of the independent advisory body.
But the veto of the economists and lawyers will not help Habeck in the internal dispute in Berlin. The FDP, especially the House of Finance Minister Christian Lindner, is said to be not particularly open to the skimming off of excess profits. The economic policy spokesman for the FDP parliamentary group, Reinhard Houben, criticizes: “We cannot threaten skimming off every special boom.” The Monopolies Commission is now giving tailwind.
Habeck’s advance in competition policy is also a reaction to the tank discount, which he believes the suppliers are not passing on to the consumer adequately. This is only possible for them because of their market power.
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The debate about skimming off excess profits is something like a proxy conflict for the excess profit tax. It is important to distinguish: the levy has nothing directly to do with the tax, which the Greens have not yet been able to enforce due to resistance from the FDP.
Cartel Office must prove illegal behavior
An excess profit tax would have to be paid by all companies that would fall under the break-even criteria defined by politicians. The expert opinion, on the other hand, deals with the “antitrust skimming of advantages”. This enables the Bundeskartellamt to deprive companies of profits that they have obtained from anti-competitive behavior.
In the case of skimming off profits, the Cartel Office would first have to identify illegal behavior, such as price fixing, and could then confiscate the additional profits gained as a result.
The Bonn authority has already uncovered various cartels. However, there has never been a skimming off of profits. The reason: Calculating how much profit may be withdrawn is highly complex. Skimming is also only permitted if the company has intentionally or negligently violated competition law. Habeck intends to “drastically simplify” this proof later this year.
From the point of view of the Monopolies Commission, this is the wrong focus. If companies behave anti-competitively, the economic advantages would already be withdrawn today. By law, the fines must exceed the benefit. There is no need for a separate excess profit skimming.
>> Read about this: Habeck’s course against the oil companies causes a stir
Even with a lowering of the proof hurdles, the central problems of skimming off excess profits remain, the Monopolies Commission states. One of them: It is difficult to determine with legal certainty what exactly an excess profit is.
Oil companies show the challenge
In addition, the skimming would be preceded by a long process before the cartel office has even determined anti-market behavior. Best example: the oil companies.
Calculations by the Monopoly Commission in its report also show that the oil situation is tricky. Along with the coking plants, mineral oil processing is the industry that recorded the highest price premiums between 2008 and 2017 at 21 percent. Oil prices have also risen significantly since the beginning of this year.
And the Cartel Office has already proven that BP (Aral), Conoco Phillips (Jet), Exxon Mobil (Esso), Shell and Total form a “dominant oligopoly” in the gas station market, i.e. they have market power and there is no full competition. That was already the case in 2012. Nevertheless, the authority found that antitrust intervention was “little promising”.
So as long as the cartel office does not find any illegal behavior such as price fixing by the oil companies, skimming off excess profits is of no use. And for the tank discount, the legal adjustments would come too late anyway.
The fact that the tank discount is hardly passed on to the consumer does not have to be due to the fact that the companies have coordinated their price increases.
(Photo: imago/Future Image)
Otherwise, the conclusion of the Monopolies Commission for Habeck’s plans is positive. In particular, she rates what is probably the biggest step positively: breaking up companies with too much market power should be possible as a last resort. Great Britain, where this is already possible and has already been used by airports and cement manufacturers, should serve as a model for this.
However, the Commission warns that fears of a break-up could stifle corporate innovation and investment. The proposed solution: The owners of the broken-up companies could receive additional government money as compensation in addition to the proceeds from the sale.
More: Habeck’s course against the oil companies causes a stir