Big regional differences
Where oligopolies dominate the gas station market
By Max Borowski
There are many gas station operators throughout Germany, none of which have a dominant position. However, an analysis at the level of districts and cities gives a completely different picture. According to the German Economic Institute, oligopolies are found in more than half of all regions.
In a large part of Germany, several companies have a dominant position in the petrol station market. The assessment of market data carried out by the German Economic Institute (IW) shows that in more than half of the cities and poviats, several service station operators have an oligopoly. In 229 out of 400 urban and neighborhood-free cities, either three operators have at least 50 percent of the market, or five companies have two-thirds of the market. This corresponds to the threshold values for a dominant position in the market under the anti-restriction of competition law.
The Bundeskartellamt recently established that competition between gas stations across the country is definitely working. While net fuel prices – ie minus taxes – have risen sharply, this is due to the difference between the crude oil price and the higher selling price of refineries, while service stations as a whole only provide price impulses from their suppliers. However, the Cartel Office also stated that this was not country-wide. The price adjustment following the energy tax cut on June 1 was carried out at a different pace depending on the region. This may be due to, inter alia, from “other conditions of competition”.
According to the analysis of economists IW Jan Büchel and Christian Rusche, these differences in competition are significant. In terms of the number of local gas stations, the three largest suppliers in the Minden-Lübbecke district of North Rhine-Westphalia have just 27 percent of the market share. On the other hand, in Trier in Rhineland-Palatinate, at the Luxembourg border, the three largest companies have 89 percent between them. market share of gas stations, with five companies accounting for 100 percent. Counties and cities with petrol station oligopolies are located in all federal states. In Saarland and Rhineland-Palatinate, as well as in southern North Rhine-Westphalia, western Hesse, eastern Lower Saxony and northern and eastern Bavaria, there are focal points with a high market concentration.
Competition law threshold values are not exceeded throughout Germany. The top three gas station operators only have around 35 percent of the market share, the top five around 47 percent. In the opinion of IW economists, however, these national values are not decisive. Because for a person living in Kiel, the Freiburg gas station is not an alternative to the Kiel gas stations and therefore not in one and the same geographic market. In their analysis, they use the number of gas stations as a measure of market share. Ratings based on sales or quantities sold may produce different results because large companies’ gas stations are often larger and generate more sales than smaller independent gas stations.
The analysis cannot answer the question to what extent service station operators actually use their regional market power. There are many other reasons for the price difference, such as regionally different logistics costs, and above all, the proximity to neighboring countries such as Luxembourg and Poland, where gasoline is sometimes much cheaper or at least has been discounted. Apart from higher prices, the lack of competition may also lead to other negative consequences, IW experts write. This includes, for example, shorter opening hours.
The authors point out that with the creation of the Fuel Market Transparency Office at the Federal Antimonopoly Office, which also provided data for analysis, action has already been taken to strengthen competition even among several suppliers. The Transparency Office collects real-time prices for all petrol stations across the country and makes them available to, for example, refueling application providers. This makes possible price differences between gas stations more visible and even a small number of free gas stations can put a competitive pressure on major suppliers.