No fines for Bulgarian fuel retailers after watchdog probe

Written by on July 30, 2012 in Bulgaria, Business, News - No comments

Bulgaria’s Commission on the Protection of Competition (CPC) said on July 30 that the local unit of Russian oil company Lukoil had not taken illegal advantage of its dominant position on the fuel retail market. On the topic of a price-fixing cartel by the four largest retailers in the country, the watchdog said that it approved a proposal by the companies that would fix competition issues.

CPC began an official investigation into allegations of price-fixing in October 2011, after completing a market analysis report commissioned in March 2011, when widespread protests against rising fuel prices in the country drew thousands of motorists.

The four companies under investigation were Lukoil Bulgaria, Rompetrol Bulgaria, Naftex Petrol and OMV Bulgaria, which combined hold about 60 per cent market share. Lukoil Bulgaria was also investigated for abusing its dominant position on the market. The company is the retail subsidiary of Russian oil giant Lukoil, which also owns Bulgaria’s sole refinery, Lukoil Neftochim in Bourgas at the Black Sea coast – the main source of petrol and diesel sold on the Bulgarian market.

CPC said in the five-year period it had investigated, it found no evidence that Lukoil’s business practice to offer loyalty bonuses for wholesale buyers had an effect of cornering the market; the increasing share of fuel imports was further proof that Lukoil was not abusing its dominant position on the market. Interruptions of service in July 2011, including by Lukoil’s aviation fuel subsidiary, were judged to have been the result of circumstances outside the companies’ control.

In March, it was reported that the four companies under investigation would be fined for entering a price-fixing cartel. Instead, according to the competition watchdog, the companies will have 30 days to implement a series of measures (first proposed by the companies) that would “effectively solve competition issues” and prevent future price-fixing cartels on the markets for diesel fuel and A95 petrol (the 95-octane petrol is the highest selling type in Bulgaria).

(Photo: sociate/flickr.com)

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