Fuel to the fire – How Germany’s fuel price crisis spilled a competition law overhaul

That three-pronged act, dubbed Fuel Measures Package and initiated by Federal Economics Minister Katherina Reiche, was introduced in the Bundestag on 17 March, subjected to a public hearing before the Committee on Economic Affairs on 20 March, and adopted by Parliament on 26 March. Germany’s second legislative body, the Bundesrat, is expected to approve on 27 March, clearing the way for the act’s entry into force before Easter.

While the act’s consumer-facing centrepiece – a new Fuel Price Adjustment Act limiting gas stations to one price increase per day at noon (modelled on Austria) – makes for easy headlines, the lasting structural changes to competition law are in Article 2: a new Section 29a of the Act against Restraints of Competition (ARC) introducing sector-specific abuse control with a reversed burden of proof, and a streamlined Section 32f ARC that turns the FCO’s sector investigation tool into a single-shot instrument.

Filling up the toolbox – The new Section 29a ARC

The new Section 29a ARC addresses a specific evidentiary problem: Proving excessive pricing under Section 19 ARC has always been hard – but in fuel markets, the legislative explanatory memorandum suggests, it is “typically associated with considerable effort and difficulty” – a phrase one might want to call a diplomatic understatement. The internal cost structures of vertically integrated oil companies are opaque, cost allocation is discretionary, and the information asymmetry between authority and companies is vast.

Section 29a ARC responds to this challenge by importing the profit-cap concept (Gewinnbegrenzungskonzept) from the energy sector-specific Section 29 ARC, and bolting on a partial reversal of the burden of proof. The authority retains the burden of showing that pricing unreasonably exceeds costs. But the company must demonstrate the allocation, level, and – where costs materially exceed market norms – the adequacy of its costs. The cost efficiency benchmark follows the judicature of the German Federal Court of Justice (KVR 51/11), meaning that costs or cost mark-ups arising solely as a result of a company’s (dominant) market position are not recognized (or, conversely, only those costs are to be taken into account that would be incurred after all “scope for rationalisation”, i.e. efficiency measures, has been exhausted).

That reversal of the burden of proof applies only in administrative proceedings, not in civil litigation. And yet it raises thorny questions. If a company fails to discharge its burden, what cost base does the authority assume? What does “adequate” even mean, especially in extreme situations like a war affecting 20% of the world’s oil distribution? Since the “unreasonableness” assessment turns on the gap between price and costs, does the structure of the provision not effectively presume that every price is abusive until the company proves otherwise?

The tension with the presumption of innocence caused by this mechanic is acute where the finding of an abusive price may underpin a fine – a result explicitly foreseen by the new law (Section 81(2) no. 1 ARC). More fundamentally, the approach risks blurring competition law and de facto price regulation: if the authority assesses “reasonableness” based on incomplete cost information, enforcement may shift from targeting exploitative conduct to supervising price formation itself – with potential chilling effects on legitimate pricing in volatile commodity markets.

The material scope is confined to upstream wholesale and refinery markets – the level where the FCO’s own sector inquiry, completed 13 months ago, identified the most serious structural concerns. The personal scope extends beyond dominance to relative market power (Section 20 ARC), capturing the dependency of independent petrol station operators on vertically integrated majors. This extension is relevant in oligopolistic markets where single-firm dominance may be absent and collective dominance hard to establish, yet persistent bottlenecks distort competitive outcomes. It does, however, aggravate the seriousness of the questions raised above: how to distinguish crisis-driven volatility (in pricing by non-dominant companies) from genuinely exploitative conduct (by a dominant actor that is virtually unchallenged by competitive forces)?

That said, the reform addresses a genuine enforcement problem – regulators typically lack timely access to the same granular cost information as the companies they oversee. In a joint statement, four fuel industry associations called the burden-of-proof reversal a “statutory presumption of guilt,” noting that the FCO’s own inquiry found no abuse and that the Section 29 ARC energy model was designed for a fundamentally different market. The provision includes a five-year sunset clause.

From three steps to two – The Section 32f ARC Reform

Section 32f ARC, introduced by the 11th ARC Amendment in 2023, gives the FCO power to impose behavioural or structural remedies where it identifies a “significant and persistent distortion of competition” – even absent any infringement. Its first test case – triggered by the abovementioned sector inquiry into fuel wholesale and refineries – immediately stalled when affected companies challenged the FCO’s information requests before the Higher Regional Court of Düsseldorf.

The reform addresses this with two changes.

First, the multi-stage procedure is collapsed: diagnosis and remedy merge into a single decision, meaning it can now identify a significant and persistent distortion of competition and impose the appropriate remedies in one fell swoop. However, this also raises the analytical stakes – the FCO must demonstrate both the existence of a structural distortion and the necessity of its chosen remedies in one integrated act, demanding rigorous economic analysis and, in all likelihood, exacting judicial scrutiny. A related concern in that regard is the authority’s limited resources: roughly one sector inquiry per year since 2005, with envisaged personnel reinforcements reportedly not materialised.

Second, the requirement that the addressee must have “substantially contributed” to the distortion is deleted. The legislator’s rationale is this: In highly concentrated markets, competitive harm often arises from market configuration rather than identifiable misconduct. Oligopolistic coordination, opaque pricing systems, and vertical integration can produce persistently supracompetitive outcomes without any single company engaging in individually infringing conduct. The former “contribution requirement” arguably invited analytically intractable disputes over individual causation. The deletion now introduced is therefore intended to clarify the instrument’s structural character: intervention is linked to persistent malfunctioning at the market level – compared to the law’s previous version, this marks a more determined reorientation from conduct control towards market structure governance.

While this change certainly has far-reaching implications for the future, a transition provision in the new law ensures that the ongoing fuel wholesale investigation also benefits from the streamlined procedure – suggesting that there may be more legal battles afoot, since legal protection remains (rightfully!) available against the FCO’s new “32f decisions”, and with suspensory effect.

While Germany is not the only jurisdiction reaching for competition law tools – in Australia, the ACCC has launched a formal antitrust investigation into the four largest wholesale suppliers and the UK’s CMA has put fuel station operators on notice that it will scrutinise “rocket and feather” pricing patterns – Berlin’s specific reform trajectory comes with a certain irony, as the governing coalition’s election programme had called for the abolition of Section 32f. Barely weeks into office, the same coalition now fast-tracked its streamlined application.

Overcorrection or overdue? – A discussion worth having

German industry association BDI has already warned that this is a reform that comes with deep interventions, rushed through without industry consultation. Similarly, retail trade association HDE noted that the Section 32f changes apply economy-wide and that the 2023 legislature had deliberately included the “substantial contribution” requirement to protect lawfully acting companies. Fuel industry associations called the combination of reversed burden of proof and streamlined remedial powers a threat to “trust in the reliability of existing competition law.” Other observers are concerned that the intervention threshold is lowered while legal protection is simultaneously thinned out – a double shift whose constitutional proportionality the memorandum that accompanied the law’s draft did not adequately address. In that regard, the reforms are indeed fuel to the fire, re-igniting criticism that had been voiced when Section 32f initially entered into force, surrounded by the ubiquitous buzzword “paradigm shift”.

The fairest assessment may be that the new measures are addressing genuine enforcement and structural problems – but that their wide-ranging impact raises demands in terms of clarity, proportionality, and legal protection that a nine-day legislative process was ill-equipped to satisfy. When eventually we see the first 32f decision imposed, one may therefore very much count on it being challenged in court, perhaps even up to the Federal Constitutional Court.

What this means

Upstream fuel companies face a new competition law risk. Wholesale traders and refiners are faced with a new avenue of FCO investigations, resulting in them having to affirmatively demonstrate the allocation, level, and adequacy of their costs. To discharge their burden of proof in that situation, they might want to take a critical look at their cost-accounting systems now.

Section 32f has a sharper edge – cutting permanently and across sectors. The streamlined procedure and deleted “substantial contribution” requirement now make the sector investigation tool significantly more operational across all sectors. This is something all companies active on any German market must now bear in mind, including and in particular those that operate in sectors which have already been subject to sector inquiries completed after the provision’s initial entry into force in November 2023 (including the EV charging infrastructure and household waste sectors). Notably, the reform may also expand the leverage of companies detrimentally affected by superior market power or structural deficiencies in such sectors. They may now feel encouraged to approach the FCO and lobby for remedies now that 32f has not just gained new clout but also renewed attention.

More on the horizon. The new act requires that the Federal Ministry of Economics must inform the legislators about the practical impact of both Section 29a and the new Section 32f ARC after five years. That said, it is very likely that the reform process is far from over. Even before the Bundesrat has formally signed off, a majority of state transport ministers have called for examining a “windfall profits tax” and further competition law measures including profit disgorgement. And going beyond fuel, signals from political Berlin suggest that a comprehensive 12th Amendment of the ARC – a larger-scale rewrite rather than a two-provision patch – may see tangible progress this year.

So while fuel and other markets remain in turmoil at the time of writing, one thing is clear: 2026 will be a year of change for German competition law.

Authored by Florian von Schreitter.