MOTOR VEHICLE FUEL PRICES (Advisory opinion)
PRESS RELEASE
Prof. Giuliano Amato, President of the Italian Competition Authority, submitted an advisory opinion to the Prime Minister, the Minister of the Treasury and the Minister of Industry with regards to the recent increases in the motor vehicle fuel prices.
Such price increases, which were set by oil companies independently and were not caused by tax reasons, widened difference between the average price charged by the Italian industry and price fixed by the main European countries.
In fact, according to fuel price index of March 10th, 1997, the Italian average price is higher by 71 and over 67 lira than the EEC average one, respectively in relation to leaded and unleaded gasoline.
The Minister of the Treasury expressed a critical opinion on the grounds for such price increases, which would not be founded on the raw material's international quotings.
The Authority highlighted that increases in motor vehicle fuel prices were to be connected to the high gross margin characterizing the fuel distribution Italian network. Indeed, such a gross margin is the highest compared to other European countries; with respect to gasoline in particular, it is higher up, to two times, compared to French and, up to three times, compared to the United Kingdom.
In November 1996, the Authority concluded a fact-finding investigation into motor vehicle fuel prices and, subsequently, suggested the opportunity of intervening in order to foster competition in this market.
On the one hand, with regards to regulation, the Authority mentioned the need to proceed as quickly as possible with the liberalization of the market, by removing the concessionary scheme in force at present. The concessionary scheme should be replaced by a simple authorization to sell oil products within the distribution network. Furthermore, the Authority considered it necessary to develop the commercial activity of service stations, by broadening the range of products on sale, and removing existing restraints in opening hours and shifts.
On the other hand, the Authority pointed out the need to change the ways of fuel supply to the distribution network. In particular, the existing relevant asymmetry in the logistics infrastructures between Agip (which holds a dominant position as it includes Agip Petroli's and Italiana Petroli's infrastructures and distribution networks) and the other companies, in addition to the contractual regulation applied to the exchange of oil finished products by the companies, constitutes a restriction on effective competition.
On occasion of the recent increases in the motor vehicle fuel prices, the Authority felt it appropriate to express an opinion under section 22 of Law no. 287/90, to suggest the removal of the mentioned regulating and structural restraints, in order to foster inter-firm competition in the national market of fuel distribution network, and to adopt pricing policies related to effective competitive conditions.