Bulgaria's Competition Watchdog Fails to Find Evidence of Fuel Cartel Agreement

Energy | November 10, 2011, Thursday // 15:03|  views

Bulgaria`s Commission on Protection of Competition has found no proof of a fuel cartel in the country. File photo.

Three months after launching an investigation into a possible fuel price-fixing cartel, the Bulgarian Commission on Protection of Competition (KZK) concluded that there was no evidence of concerted practices among the four major players on the market.

The findings are part of KZK's fuel sector analysis which was initially labeled a classified document but was later made public, Sega daily reminds.

The competition watchdog admits in the document that it concluded the inspection with reasonable doubts for the existence of a cartel agreement but nevertheless found it impossible to prove anti-competitive behavior.

KZK launched a probe into a possible cartel agreement between Lukoil Bulgaria, Rompetrol, Naftex Petrol and OMV.

Under Bulgarian legislation, such violations are punishable by a fine of up to 10% of the company's turnover.

KZK's report points out that the four companies have a market share of over 60% which could lead to companies engaging in anti-competitive agreements.

The experts warn, however, that this does not necessarily constitute an infringement.

The analysis states that price-fixing agreements cannot be proved without evidence of contacts between the participants on the market.

In other words, oligopolistic pricing achieved as a result of tacit collusion cannot be considered a breach of competition rules but an "smart adjustment to the competitor."

The analysis examines the market shares of the different participants in in the petroleum business in the country.

The document informs of a decrease in Lukoil Bulgaria' s share in 2010, specifying that the other probe into the company on
its dominant position was opened because of potential clauses in its wholesale contracts.

As a main supplier to its direct competitors, Lukoil Bulgaria could impose discount schemes which could lead to a breach of effective competition, KZK argues.

KZK's final conclusion on the company's competitive behavior is yet to be announced.

The probe against Lukoil for abuse of its dominant position was launched in August 2011.

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Tags: Commission on Protection of Competition, KZK, fuel prices, fuel sector, cartel probe, cartel agreement, price-fixing, abuse of dominant position, Lukoil Bulgaria, fuel retailer, wholesale trade


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