Bulgaria's Competition Watchdog Files Price-Fixing Claim against 6 Fuel Companies

Business » ENERGY | October 10, 2016, Monday // 13:12
Bulgaria: Bulgaria's Competition Watchdog Files Price-Fixing Claim against 6 Fuel Companies File photo, BGNES

The Competition Protection Commission of Bulgaria (CPC) has accused six petrol and diesel retailers of forming a cartel in the fuels market.

The companies concerned are Lukoil Bulgaria EOOD, Eko Bulgaria EAD, Shell Bulgaria EAD, OMV Bulgaria OOD, Nis Petrol EOOD, and Petrol AD.

All of them are accused of breaching Article 15 of the Law on Protection of Competition and Article 101 of the Treaty on the Functioning of the European Union.

The entities in question are yet to comment.

The initial probe into suspected price-fixing activities, formally launched in February, included Rompetrol, which is not in the current list of companies the CPC believes are part of the cartel agreement.

The probe was launched after the CPC adopted a sector analysis which showed that they had kept their prices at high levels for long periods of time and failed to react in a timely and adequate manner to decreases in wholesale price and production prices, “which could be the result of anti-competition practices  - cartel agreements”, according to the statement.

Bulgaria's legislation (Article 15 of the competition law [DOC]), which does not differ substantially from the respective article in the EU treaty, prohibits "all types of agreements between undertakings, decisions by associations of undertakings as well as concerted practices of two or more undertakings having as their object or effect the prevention, restriction or distortion of competition on the relevant market".

Types of agreements covered by the article include "those which:

- directly or indirectly fix prices or other trading conditions;
- share markets or sources of supply;
- limit or control production, trade, technical development or investment;
- apply to certain partners dissimilar conditions for equivalent transactions, thereby placing them at a competitive disadvantage;
- make the conclusion of contracts subject to acceptance by the other party of supplementary obligations or to the conclusion of additional contracts which, by their nature or in accordance with commercial usage, have no connection with the subject of the main contract or to its performance."

Based on its economic and legal analysis, the CPC deems the actions of the retailers mentioned to be "a violation consisting of a prohibited agreement and/or coordinated practice of exchange of pricing information and conducting of a common price policy, as well as exchange of information on the realized sales volumes (market shares) and other market information for the sake of cooperation on pricing."

The activities in question "aim to prevent, restrict and violate competition on the retail market of petrol and diesel fuels in the country."

These also lead to "elimination of competition, which removes the natural mechanisms of free market and impacts in an unfavourable manner the economic environment and interests of society."

The ruling cannot be appealed, but the parties concerned may present written objections and demand a hearing at the CPC with regard to the claim.

A separate investigation of potential abuse of dominant wholesale market position was launched in February against Bulgaria’s sole oil refinery Lukoil Neftochim Burgas, which, according to the sector analysis adopted by the CPC, had sold automotive fuels in Bulgaria at higher prices compared to its export prices. The commission believes the producer prices of oil products in Bulgaria "could be influenced by factors other than then market" potentially allowing Lukoil Neftochim to gain "additional economic benefits inside the country."


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Tags: fuels cartel, fuels market, competition, Competition Protection Commission
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