New business areas for municipal utilities?

What is it about?

Whether and to what extent municipal enterprises may expand their business activities is determined by the provisions of local government law governing economic activities (Section 136 of the NKomVG). Such expansions are generally permitted provided that the requirements of the so-called „triad of restrictions“ are met: It is required that a public purpose justifies the activity, that the economic activity is, in terms of its nature and scope, proportionate to the municipality’s financial capacity, and that the purpose cannot be fulfilled more effectively or economically by a private third party.

In the energy sector, Section 136(1), sentence 3 et seq. of the NKomVG has provided for significant simplifications since 2016. But what applies to skilled trade activities, which have hitherto been carried out primarily by private craft businesses? Here, too – for example, if a local plumber closes down his business due to retirement and his employees are unable or unwilling to continue it, but heating systems still need to be serviced or heat pumps need to be installed – the question of whether the municipal utility should take over may arise.

The seminar provides an overview of the local government regulations governing economic activity and explains how these practical issues can be resolved from a legal perspective