UNIONE PETROLIFERA/PIANO DI RAZIONALIZZAZIONE DELLA RETE CARBURANTI
PRESS RELEASE
PRESS RELEASE
The Competition Authority has authorised the plan to restructure the fuel distribution network
At its meeting on 19 July 2001 the Competition Authority resolved to authorise an agreement, notified by Unione Petrolifera on 21 March 2001, consisting of a fuel distribution network Restructuring Plan over a period of three years, pursuant to section 4 of the Competition Act.
The purpose of this agreement is to restructure the fuel distribution network over the period 2001-2003 by closing down approximately 2700 petrol stations.
The Authority considers that this agreement distorts competition in certain respects, in violation of section 2 the Competition Act, the most important of which is the criterion used to decide the number of petrol stations to be closed in proportion to the market share of each oil company, to minimise the impact of the station closures on their market shares. Another allied restriction on competition is the exchange of sensitive information between competitors, particularly information on the number of petrol stations being closed down in implementation of this Plan, and the constitution of a Fund to foster the closure of the petrol stations, into which the associated companies will pay contributions, which creates our "mutuality bond" between competing companies, in the sense that they will pay a single contribution into the fund based on their fuel sales.
On 22 June 2001, Unione Petrolifera supplemented its notification of the agreement by stating that some of its member companies were willing to sell at least 210 of their petrol stations to third parties who were not also parties to this agreement, using transparent procedures managed by an external auditor.
This supplementary notice was decisive to the assessment of the case, and as a result of it the Authority ruled that the conditions required by section 4 of the Competition Act - improving the offering, benefiting consumers, the lack of unnecessary restrictions, and the non-elimination of competition - had been met, and that it could therefore authorise the agreement as an exception to the prohibition provided by section 2 of the Competition Act.
Following the sale of petrol stations to third parties, during the course of the next three years the conditions would be created that would permit the entry of new companies to the relevant market. This would additionally make it possible to overcome the entry barriers raised by certain regional laws which still require the surrender of existing permits in order to qualify for a new permit to open new petrol service stations. All this can help to create a more competitive environment, also in terms of competitive pricing, against the incumbent companies. This latter effect is certainly important because it is only by improving the overall competitive conditions in this way on this relevant market that it will be possible to pass on the cost reductions in a wholly credible manner as a result of this agreement, in the form of reduced pump prices.
Following this appraisal, the Authority therefore authorised the agreement until 31 December 2003 in respect of the part relating to the agreed closure of about 3000 petrol stations, and until 25 March 2005 for the part relating to the establishment of a fund to provide incentives to dismantle and clean up and rehabilitate the sites formerly occupied by the closed stations.
Rome, 25 July 2001