Stampa

I681 - RETAIL FUEL PRICES (Start of investigation)


PRESS RELEASE



PRESS RELEASE


PETROL PRICES: ANTITRUST AUTHORITY LAUNCHES INVESTIGATION INTO NINE OIL COMPANIES
OVER POSSIBLE ANTI-COMPETITIVE PRICING AGREEMENT

Parallel pricing ensured by continuous exchange of information


The Italian Competition Authority, at its meeting on 18 January 2007, opened an investigation into nine oil companies over an alleged anti-competitive agreement.

According to the Authority's information, ENI, Esso Italiana, Kuwait Petroleum Italia, Shell Italia, Tamoil Italia, Total Italia, Erg Petroli, IP and Api, since at least the end of 2004 have been colluding, by way of continuous exchanges of information, in determining the fuel prices to be recommended to service stations. Basically, the oil companies are alleged to have agreed on the fixing of recommended prices, which consequently have moved and continue to move in parallel, with simultaneous changes in the same direction and of the same size, in violation of competition rules.

In the Authority's view, fuel retailing is an uncompetitive market where there are significant barriers to entry which must be removed, as was documented in a recent submission to the Government, Parliament and the Regions. Moreover, in an environment sheltered from competition, since the end of 2004 the prices of petrol (gasoline) and diesel in Italy have been managed so as to respond to the structural evolution of the market (a drop in the consumption of petrol and increasing use of diesel) by transferring the bigger gross margin (and the greater divergence from the EU average) from petrol to diesel. The result is that retail fuel prices and gross margins are higher in Italy than they are abroad.

According to the Authority's initial survey, begun following a series of complaints presented since 2005 by the National Association of Artisans and Small and Medium Transport Businesses, parallelism in the recommended prices, observed over a period of time, begins with the fixing of the price by ENI, the price-leader, and this lead is followed by the competition.

From October 2004, ENI began using a new method which is less strictly linked to variations in the cost of crude (the so-called “Platts quotations”). The other companies, instead of continuing to base their pricing policies on the criteria used up to that point, chose to conform to ENI's movements by immediately adopting the new criterion.

This parallelism in pricing has been further guaranteed over the years by the exchange of information; this takes place through various channels. A certain transparency in recommended prices which favours collusion is actually generated by the Ministry of Economic Development itself which publishes the base recommended prices of each oil company on its website, using criteria defined by the Oil Market Monitoring Unit within the Ministry. For this very reason, in its recent submission the Authority requested that the Government and Parliament review the functioning of the Monitoring Unit which, besides, includes representatives of both the oil companies and the service station operators.

In any case, these companies also announce their base recommended prices in the press. And they supply at least one specialist magazine with information about their differential supplements, i.e. a component of the recommended price that is in no way available on the Ministry's website or from other public sources. Thus, the parties are aware of all the components of the recommended price and can effectively monitor each other's moves.

The investigation must be completed by 31 March 2008.


Rome, 23 January 2007