The Competition Commission is shortly expected to issue two key documents on fuel trading. The first will be a ruling on what it has described as a “harmonized” discounting policy among the top two distributors, Shell and BP, for unleaded gasoline, while the second will contain recommendations for bolstering competition at all stages of fuel trading.
The independent watchdog has already recommended the imposition of a mammoth fine totaling more than 100 million euros on the two companies for maintaining a steady, non-competitive relationship in determining unleaded gasoline prices. A second recommendation, after a re-examination, confirmed the findings of the first but, unlike in similar cases, made no mention of a fine.
Development Ministry sources suggested that the second document, with ideas for bolstering competition, will provide the basis for an overhaul of the entire regulatory framework that will govern the fuel market, targeting in particular the numerous distortions of competition. It was drafted after a lengthy process of consultation with all parties involved.
One year after issuing its first report on competition in the sector, the Competition Commission recently found that little progress has been made.
“Despite the introduction of specific rules of conduct among market players (refiners and wholesalers) and the submission of a batch of measures to the government for promoting healthy competition in the sector, serious distortions and problems are still evident which are incompatible with the operation of a deregulated market,” it said.
In particular, the watchdog notes that the high market concentration resulting from the operation of only two refiners, Hellenic Petroleum and Motor Oil, is further exacerbated by the fact that very few companies are able to import fuel, as they lack the capacity for maintaining security reserves.
In Greece there is no independent, non-profitmaking agency for monitoring security reserves and no breakdown of specific cost items has been made by refiners to date.
Other problems include non-transparent procedures for setting the wholesale prices at which gasoline stations buy from the fuel companies, while discounts are not based on objective criteria but on discriminatory treatment against retailers.
Competition is further impeded by limitations on the working hours of gas stations which push up prices, the setting of minimum transportation fees for fuel tankers, the prohibition on the circulation of private tankers and the ceiling on the number of gasoline stations at supermarkets, where prices are lower.
Following the publication of the final recommendations by the Competition Commission, the issue will be whether the government has the necessary political will to adopt and implement them.
(KATHIMERINI, 08/11/2008)