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Germany’s Habeck vows tougher antitrust law after fuel relief flop

BERLIN — German Vice Chancellor Robert Habeck vowed to create new antitrust laws with “claws and teeth” that could target energy companies after a measure to ease the pain of high fuel prices flopped.

Starting on June 1, the government cut taxes for the sector for three months with the aim of lowering prices at the pump. But politicians say fossil fuel companies have not passed on the benefits to consumers, with prices even rising in some cases. Critics say the scheme also subsidizes carbon emissions when the government should be encouraging greener transport.

The measure is expected to cost the government more than €3 billion. It is part of a package, which also includes cut-price public transport, aimed at reducing the cost of mobility for German residents in a period of high inflation and uncertainty caused by Russia’s war on Ukraine.

Habeck, a senior Green who is also climate and economy minister, had proposed a tax on excess profits as another way to target fossil fuel companies. In an interview with Germany’s Deutschlandfunk radio on Monday, he admitted this would not have the support of all members of the governing coalition.

But Habeck said there was broader support for a reform of antitrust laws — from Chancellor Olaf Scholz’s Social Democrats (SPD) and from Finance Minister Christian Lindner’s liberal Free Democrats (FDP). Lindner had fiercely opposed the plan to go after energy companies’ high profits.

Habeck said his plan included giving authorities greater powers to examine the finances of companies and changing the law to alter the burden of proof in establishing whether a cartel was in place.

“It’s currently difficult to apply because it must be proven that there is a cartel,” the minister said, adding that “to facilitate this proof … we need to reform the antitrust law. And then, in fact, you can do what an excess profits tax could do, which is apparently not politically enforceable.”

The reforms will be presented in the coming weeks but will take longer to pass into law, said Beate Baron, a spokesperson for Habeck’s ministry. The legislative amendment will include extra powers to investigate sectors and lower the bar for action in markets with a limited pool of suppliers even if outright collusion or price-fixing cannot be proven, she told a regular government news briefing.

“There are possibilities for intervention in the existing law, but we are tightening them up again and lowering the hurdles for action, especially in markets characterized by a small number of suppliers,” Baron said.

For his part, Lindner defended his decision to oppose a tax on excess profits. “Our tax law does not recognize ‘excess profits,’ it only knows profits, and those are taxed in Germany,” he stressed in an interview with public broadcaster ARD on Sunday.

The tax cut for energy companies was championed by the FDP, which campaigns for fiscal relief. Asked about the policy’s failure, Lindner said he too is “vexed” by high fuel prices. But he argued that they would be even higher had it not been for the tax reduction, citing global reasons for expensive fuel.

“We know that the world market price for crude oil has risen, the dollar is very strong compared to the euro, and we also have shortages at the refineries in Germany,” he said.

Hans von der Burchard contributed reporting.

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