site.btaMP: Anti-Trust Commission's Investigation of Possible Cartel in Fuel Market Is Belated

MP: Anti-Trust Commission's Investigation of  Possible Cartel in Fuel Market Is Belated

Sofia, February 26 (BTA) - Following an announcement by the Commission for the Protection of Competition (CPC) Thursday that it is launching a probe for possible cartel pricing on the Bulgarian fuel market, MP Martin Dimitrov (Reformist Bloc) said Friday that the regulator's actions are belated. "Fuel prices in Bulgaria were among EU's highest last year," he said.

He also said that the procedure for a cartel on the fuel market was started by the current members of the CPC but the true investigation will be done by the next Commission which is due to be elected by Parliament over the coming weeks. "The new Commission composition should show resolute action and achieve results," Dimitrov said.

He has been campaigning for quite a while against the high fuel prices in Bulgaria and the failure of the CPC to prove the widely shared suspicions that they are the result of cartel pricing.

Also, Dimitrov and fellow Reformist Bloc deputy Peter Slavov have been trying to establish who owns the excise duty warehouses, where fuels are stored, so that legislative measures can be proposed if a concentration of such ownership is established and the market is distorted. The Finance Ministry has refused to provide such information citing tax confidentiality and the two MPs now are suing the Minister.

Dimitrov said they have asked FInance Minister Vladislav Goranov how come this information was made available in 2011 when he was deputy finance minister and now it is a tax secret.

Law does not allow surprise searches at companies probed for cartel pricing

CPC spokesman Mario Garvilov told Nova TV that he expects the announcement of the probe to have "an immediate psychological effect" of lowering the price of fuels in
Bulgaria. The CPC has no legal tools to exercise pressure on the market players to influence their pricing policy other than imposing a fine, he explained.

Gavrilov said that in the process of establishing a possible cartel, the CPC will hold hearings of the companied being probed, conduct searches and seize documents. 

He explained, though, that according to the law, the CPC can make a search only after obtaining a court warrant and the court is required to notify the entity being checked. "It means that we go there [for a search] when we are expected," Garvilov said in a comment of inadequate legislation.

He also said that the applicable law sets no deadlines for the completion of a cartel probe and he wouldn't say when he expects the probe to be over.

The CPC said Thursday that its sectoral analysis has established that several chains of filling stations have maitained suspiciously uniform high fuel prices for a long time despite the slump in oil prices.

Gavrilov said that the majority of retailors buy from the Bourgas-based oil refinery of LUKOil but some also have other suppliers as well, which means that there should be some price fluctuation - and there has been none.

LUKOil will also be included in the CPC probe as it has been found to sell fuel to other countries cheaper than it sells in Bulgaria, and this makes no market sense.

No regional cartel in Varna

The CPC spokesman said that they have also been alerted about a fuel cartel by Nikolay Mareshki, the owner of a chain of pharmacies who recently went into the fuel retail business. He opened several filling stations starting in his home city of Varna, where he sells the fuel 0.30 leva/l cheaper than the other filling stations.

Nova TV showed cars waiting in long lines at one of Mareshki's filling stations in Aytos, close to Bourgas on the Black Sea. A gas station attendant told the Nova TV reporter that absolutely everybody fills up their tank. Other gas stations are crying
bitter tears: the owner of a nearby gas station was first forced to lower his prices and then sack half of his staff, the reporter said.

There has been no check for dumping pricing by Mareshki - and no check by the CPC, Gavrilov said.

The CPC, however, has established that no regional cartel exists in Varna: Mareshki has forced the other players to adjust their prices. "What happened with prices in Varna was normal and showed normal market mechanism," commented the CPC spokesman.

He said that the CPC has established similar prices in Sofia and on Hemus motorway but such gas stations don't get as much publicity as Mareshki's.