The second session of the Working Group (June 2012, Vienna) was devoted to the methodologies of determining the oil and oil products markets, and to consideration of characteristics of the wholesale and retail trade and the oil and oil products markets stipulated by the oligopolistic market structure and by chains of vertically integrated links among participants.

At the session, the participants noted that all the countries use a similar approach to market analysis. There is practice of violation of antimonopoly legislation. In particular, one of the most important ones are the cases of Italy and Russia.

Italian experience. From 2004 to 2006, the Italian Competition Authority considered a case against the largest oil companies: Eni, Exxon, Total, Tamoyl, Kuwait, and Shell.  In this framework it was found that the participants of the oligopolistic market had come to a competition restricting agreement, including the refusal from competing with each other at actual airline tenders, as well as other anti-competitive behavior. According to the results of the case hearing, vertically integrated oil companies have been fined more than 300 million euros.

Russian experience. From 2008 to 2011, the FAS Russia considered the three "waves" of cases on abuse of collective dominance position in the market by large vertically integrated companies, both state-owned companies, such as Gazprom Neft and Rosneft, and private companies Lukoil, TNK-BP, and Bashneft. The courts have fully confirmed the legality and validity of the conclusions of the FAS Russia. The amount of fines  transferred to the budget of the Russian Federation was more than 500 million euros.

The FAS Russia also considered a set of cases against fuel complexes in airports. The Rules for Non-Discriminatory Access to Services and Essential Facilities of Infrastructure in Airports have been have been in force beginning 2009. Alternative fuel complexes are actively developing; at least two fuel complexes operate in each of 26 airports. This promotes growth of air transportation. Since 2010 growth of air transportation has been exceeding 20% per annum.

The aspects noted of market analysis are in the picture of in the country (cross-country) analysis of markets for oil and oil products.

German experience. The study of the oil sector in Germany conducted by Germany Competition Authority found collective dominance of five companies (BP, Shell, ConocoPhillips, ExxonMobil and Total) in the retail market of oil products.

EU experience. Other countries, including the UK, Poland and Spain have also investigated markets for oil and oil products. Bruno Lasserre, the Chair of the European Competition Network urged EU Member States “to pool their resources to launch common sector inquiries.” (GCR, September 2012)

 

International Working Group on Investigating Issues on Pricing in the Oil and Oil Product Markets and Methods of their Functioning

Second Session

MINUTES

June 29, 2012

Vienna

 

The Republic of Austria

Co-chairs: 

From the Republic of Austria:

Peter MATOUSEK

 

Deputy Director General of the Austrian Federal Competition Authority

 

 

From the Russian Federation:

Anatoly Golomolzin

 

 

 

Deputy Head of the FAS Russia

 

Agenda:

  1. Issues related to determination of the product and geographical boundaries of the wholesale and retail markets of oil and petroleum products;
  2. Topics, time and location of subsequent meetings of the Working Group.

Presentations:

  1. The following persons have made the presentations according to Paragraph 1 of the Agenda (see the presentations in Supplement No.1 to these Minutes):

1.1.         Anatoly Golomolzin has made the presentation “The Methodologies for Defining Product and Geographic Boundaries of Wholesale and Retail Markets of Oil and Oil Products” on experience of the Russian Federation for analyzing the state of competition on the markets of oil products, paying special attention to the practice of establishing collective dominance of participants of oil products market, the methodologies for defining product and geographic boundaries of wholesale market of oil products in the Russian Federation, and discussed the outcome of judicial proceedings as well as specifics of pricing on the market of oil products and measures undertaken by FAS Russia;

1.2.         Sandro Gleave made the presentation on the methodology for defining geographic boundaries of retail gasoline market in Germany and shared German experience of investigating retail markets of oil products;

1.2.1.  Rainer Kaltenbrunner made the presentation studies of oil products markets being conducted by Austria, including studies of wholesale and retail markets, relationships between companies operating on these markets, specifics of transportation and pricing on these markets;

1.3.         Zoltan Bara made the presentation on the import equality of prices in the wholesale markets of liquid fuel;

1.4.         Boriana Chotekova made the presentation on research conducted by the Commission for Protection of Bulgaria in the motor fuel market.

  1. Under Paragraph 2 of the Agenda, Anatoly Golomolzin made the proposal of the subject, time and location of the next meeting of the Working Group.

Decisions:

  1. After the presentations the following was noted:

1.1.         the influence of the market structure on the state of competition on wholesale and retail markets, the problems of collective dominance of the main market participants, strengthening dominant position through chains of vertical integration;

1.2.         specifics of classifying dominant position on wholesale and retail markets;

1.3.         significance of interactions between global and national markets, as well as market entry barriers.

  1. Under Paragraph 2 of the Agenda it was decided:

2.1.         To hold the third meeting of the Working Group within the framework of the International event “The Russian Competition Day” which will be held from September 11 to 13, 2012 in Kazan;

2.2.         To identify topics for future meetings as follows (see Supplement No. 2 “The Block Diagram of the Main Activities of the Working Group on Investigating Issues on Pricing in the Oil Product Markets and Methods of their Functioning in the Near Future”):

2.2.1.  the third session (September 11-13, 2012, Kazan, Russia) – the existing approaches to monitoring and analysis of the wholesale and retail markets of oil and petroleum products;

2.2.2.  the fourth session – study of the issues of pricing of oil and oil products on domestic markets, including the impact of world prices on the pricing of national markets;

2.2.3.  the fifth session – (а) Exchange of experience and approaches to the enforcement of the antimonopoly legislation in the market of oil and oil products; (b) Discussion of non-confidential information exchange proceedings among members of the Working Group.

A Method to Delineate the Geographic Market of Gasoline Stations (S. Gleave)
(PDF, 1 Mb)
Import Parity Principle in Liquid Fuel Pricing (Z. Bara)
(PDF, 251,04 Kb)
Methodology for Determining the Product and Geographical Boundaries of the Wholesale and Retail Markets of Oil and Petroleum Products (A. Golomolzin)
(PDF, 1,25 Mb)
Minutes 2 - Oil Working Group
(PDF, 112,52 Kb)
Outline of the Market Inquiry of the FCA (R. Kasltenbrunner)
(PDF, 86,96 Kb)
The CPC's Motor Fuel Sector Inquiry (2011) (B. Chotekova)
(PDF, 761,42 Kb)