Regulation and Third-Party Discrimination in the German Electricity Supply Industry

Despite the monopolistic networks, the liberalized electricity supply industry in Germany is unregulated; the network-access charges are only subject to competition law, not to ex-ante approval. This paper explores the consequences of this policy by analyzing empirical observation with the theory of vertical relations. It concludes that the authorities' focus should be on the level of the access charges and not on discriminatory behavior. Unregulated access charges imply that the integrated firms have different incentives as compared to the independent entrants with respect to the competitive markets. Thereby, the principle of a level playing field is violated.