Published in the Cambridge Journal of Regions, Economy and Society , the study by Professor Germà Bel and researcher Joël Bühler, from the Faculty of Economics and Business at the University of Barcelona, shows that the remunicipalisation of urban water has become the most effective tool for curbing the quasi-monopolistic power of large private companies in Catalonia, far above competition for contracts.
The article examines how, after decades of privatization, a very large and highly concentrated market - with a single private company dominating most contracts - has created conditions conducive to many local councils opting to regain direct management of the service. Methodologically, the authors combine analysis of Spanish and Catalan databases with surveys and interviews in 78 municipalities to study both the evolution of the degree of privatization and concentration and the motivations, instruments and results of remunicipalisation. From a perspective that integrates public economics and state theory, the paper reflects on how private monopoly conditions local political decision-making capacity and on the extent remunicipalisation opens the door to more democratic models of water management.
The study reveals that the private water market in Catalonia is dominated by Agbar, a company owned by the French multinational Veolia, which manages 78% of municipalities with private management. This company also serves 88% of the population that is served by private companies in Catalonia. The concentration is reflected in a Herfindahl-Hirschman Index (HHI) of between 6,000 and 6,600 points, well above the threshold of 1,800 points that US regulators consider indicative of a monopoly. Researchers explain that this monopolization intensified in the late 2000s, when Agbar bought its regional competitor, Cassa, shortly after laws were passed to increase competition in the contract market.
Between 2017 and 2024, private management in Catalonia fell from 45.2% to 42.4% of municipalities, and the population supplied by private companies fell from 79.5% to 73%. These figures contrast with the relative stability of Agbar's share within the privatized segment, which throughout this period has remained at around 78% of municipalities with private management.
The main conclusion of the research is that remunicipalisation, rather than competition between private companies for contracts, is the only strategy that has effectively reduced Agbar's market power. Between 2017 and 2024, remunicipalisation reduced the company's overall market share by more than five percentage points, while competition in the contract market had no significant effect on its dominant position. This demonstrates that competitive tendering for contracts, which is the theoretical mechanism for ensuring efficiency in private management, has not worked as an effective tool for combating monopoly in Catalonia.
