Bulgaria competition watchdog fines Lukoil 195.1M leva for abuse of dominant position

Bulgaria’s Commission for Protection of Competition (CPC) said on April 5 that it levied 195.1 million leva, or 99.8 million euro, in fines on two local subsidiaries of Russian privately-held oil major Lukoil, for abusing their dominant market position.

The regulator said that the fines are the result of an investigation started in April 2020, which looked at whether downstream operator Lukoil Bulgaria and refinery Lukoil Neftochim restricted access to their tax warehouses and transport infrastructure.

CPC said that its investigation concluded that the companies “created conditions for limiting competition by raising barriers in the way of fuel imports.”

In particular, by denying its competitors access to tax warehouses, where fuels must be stored for the purpose of calculating the amount of excise duty owed, Lukoil’s two subsidiaries effectively limited fuel imports, CPC said.

The existing storage and transport infrastructure owned by Lukoil could not be effectively replicated, in part due to high costs, but also due to the legacy nature of the transportation network, as it was built by the state and later privatised, the report findings said.

Lukoil owns between 80 per cent and 90 per cent of petrol tax warehouses in the country and 70 per cent to 80 per cent of fuel oil tax warehouses, the regulator said in its report.

By restricting imports, Lukoil forced wholesalers to purchase fuels produced at Lukoil Neftochim, the country’s sole refinery in Bourgas on the Black Sea coast, the regulator’s report said.

This is the second major fine imposed by CPC on Lukoil in recent months. In February, it fined Lukoil Bulgaria 67.8 million leva for abusing its dominant market position by using pricing policy to limit competition in wholesale trade of fuels.

This time, Lukoil Bulgaria was fined 55.3 million leva and Lukoil Neftochim was fined 139.9 million leva.

As it did in the previous process, CPC redacted most of the figures in its calculation, including the companies’ sales revenue and the fines’ relative weight compared to revenue.

In this case, the CPC said that there no mitigating factors, but no aggravating circumstances either, meaning that the maximum fine was 10 per cent of the companies’ sales revenue. By redacting the figures, however, the regulator left unclear whether it imposed the maximum fines possible.

CPC rejected Lukoil’s requests for additional evidence and forensic assessments, as well as the objections that it was not acting in an independent manner. The ruling can be appealed within 14 days at the Sofia District Administrative Court.

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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