Bulgaria competition watchdog fines Lukoil 67.8M leva for abuse of dominant position

Bulgaria’s Commission for Protection of Competition (CPC) said on February 17 that it levied a 67.8 million leva, or 34.7 million euro, fine on Lukoil Bulgaria, the downstream unit of Russian privately-held oil major Lukoil, for abusing its dominant market position.

The announcement comes five months after the regulator accused the company of breaching both Bulgaria’s Competition Protection Act and the Treaty on the Functioning of the European Union, specifically the articles that prohibit abuse of dominant market position.

The watchdog said that it reached that conclusion after opening an investigation in 2021, prompted by complaints lodged by Lukoil Bulgaria’s competitors on the fuel retail market, OMV Bulgaria and Insa Oil.

OMV Bulgaria alleged that Lukoil was using pricing policies with regards to fuel wholesalers with the goal of pushing competitors out of the market, while Insa Oil alleged that Lukoil used predatory pricing in the sale of diesel fuel and fuel oil.

At the time, CPC said that during its investigation, it “identified competition issues in relation to the price policy applied by the company in the wholesale trade of motor fuels on the territory of the country.”

Lukoil’s pricing policy changes in 2021 were part of a strategy to “limit competition in wholesale trade of fuels,” the CPC said on February 17.

The regulator said that it’s “timely intervention” prevented Lukoil’s goal to “gradually take over the wholesale fuel market”, noting that the company “changed and corrected its behaviour” during the course of the investigation.

In its ruling, the regulator said that given the gravity of the breach, the maximum fine was up to 15 per cent of Lukoil Bulgaria’s sales revenue for the last completed fiscal year.

However, in the section regarding the calculation of the fine, CPC redacted most of the figures, including the percentage of the fine and Lukoil Bulgaria’s sales revenue in 2022.

Although the 67.8 million leva is one of the largest ever imposed by CPC, the obscured calculation process is likely to leave doubts about whether the regulator levied the largest amount possible.

CPC rejected Lukoil Bulgaria’s requests for extending the probe and additional forensic assessment, but said that there was no need to take action for the breach of the Treaty on the Functioning of the European Union. The ruling can be appealed within 14 days at the Sofia District Administrative Court.

In addition to the retail unit, Lukoil also owns Bulgaria’s sole refinery, Lukoil Neftochim in Bourgas at the Black Sea coast, which is the main source of petrol and diesel fuel sold on the Bulgarian market.

CPC had previously investigated Lukoil Bulgaria – in 2017, as part of a price-fixing cartel on the fuel distribution market, and in 2012, for alleged abuse of dominant position (it was cleared) and participation in a price-fixing cartel. On those occasions, the regulator closed the investigations without imposing any fines.

Separately, the regulator ruled in 2017 on a complaint filed against both Lukoil Bulgaria and Lukoil Neftochim, lodged by another fuel retailer, finding that there was no evidence that either of them abused their market position.

(Lukoil petrol station. Photo: sociate/flickr.com)

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