EU: Oil, Biofuel Companies May Have Colluded on Price Distortion

EU: Oil, Bio­fu­el Com­pa­nies May Have Col­lud­ed on Price Distortion

May 14, 2013. Source: Frances Robin­son, Wall Street Journal

BRUSSELS–The Euro­pean Union’s antitrust author­i­ties raid­ed the offices of oil and bio­fu­el com­pa­nies in two EU mem­ber states and Nor­way on sus­pi­cion of dis­tort­ing prices, the EU Com­mis­sion said Tuesday.

“On 14 May 2013, Com­mis­sion offi­cials car­ried out unan­nounced inspec­tions at the premis­es of sev­er­al com­pa­nies active in and pro­vid­ing ser­vices to the crude oil, refined oil prod­ucts and bio­fu­els sec­tors,” it said in a state­ment. “The Com­mis­sion has con­cerns that the com­pa­nies may have col­lud­ed in report­ing dis­tort­ed prices to a Price Report­ing Agency to manip­u­late the pub­lished prices for a num­ber of oil and bio­fu­el products.”

The Com­mis­sion is also con­cerned that the com­pa­nies may have pre­vent­ed oth­ers from par­tic­i­pat­ing in the price assess­ment process, with a view to dis­tort­ing pub­lished prices, it added. The prices assessed and pub­lished by Price Report­ing Agen­cies serve as bench­marks for trad­ing in the phys­i­cal and finan­cial deriv­a­tive mar­kets of a num­ber of com­mod­i­ty prod­ucts in Europe and glob­al­ly. “Even small dis­tor­tions of assessed prices may have a huge impact on the prices of crude oil, refined oil prod­ucts and bio­fu­els pur­chas­es and sales, poten­tial­ly harm­ing final con­sumers,” the Com­mis­sion said.

The raids are a first step in inves­ti­gat­ing sus­pect­ed anti-com­pet­i­tive prac­tices and don’t mean the com­pa­nies are guilty of anti-com­pet­i­tive behav­ior. The Com­mis­sion respects the rights of defense, in par­tic­u­lar the right of com­pa­nies to be heard in antitrust pro­ceed­ings. There is no fixed timescale for proceedings.

Nor­we­gian com­pa­ny Sta­toil ASA (STL.OS) said its Sta­vanger office had been inspect­ed and it is “coop­er­at­ing with the author­i­ties in their inspection.”

The sus­pect­ed vio­la­tions are relat­ed to the Platts’ Mar­ket-On-Close (MOC) price assess­ment process that is used to report prices in par­tic­u­lar for crude oil, refined oil prod­ucts and bio­fu­els, and may have been on-going since 2002, Sta­toil said.

Roy­al Dutch Shell PLC (RDSB.LN) also con­firmed Tues­day that Shell com­pa­nies are assist­ing the Euro­pean Com­mis­sion in an enquiry into trad­ing activities.