The existing regime
The German oil and fuel sector has been the subject of the FCO’s scrutiny already since 2013. Based on relevant legislation passed at the time, the FCO started to operate the so-called Market Transparency Unit for Fuel (Markttransparenzstelle für Kraftstoffe – MTS-K). It requires public petrol stations or companies with the authority to set their prices to report price changes for the most commonly used types of fuel: Super E5, Super E10, and diesel.
The price data collected by MTS-K is permanently shared with third-party consumer information services, which in turn make the data available to consumers via online applications, allowing consumers to keep track of actual price developments and potentially increasing competition in the relevant local petrol markets.
But the price information and relevant market insights also enable the FCO to monitor (price-related) competitive dynamics in the fuel sector and potentially intervene in case of suspicion of collusion or abusive practice. That said, in recent years, the FCO has only summarized its observations on market developments in its annual report on the MTS-K (publicly available on the FCO’s website). The FCO did not enter targeted investigations in relation to individual companies based on insights gained through the MTS-K.
German petrol prices disconnected from commodity price
Russia’s invasion of Ukraine coming on top of the already prevailing energy crisis in Germany has led to new record price peaks in the German fuel market in the first half of March 2022. In the meantime, the commodity price of raw mineral oil in the world market has declined again, but petrol continues to be far more expensive in Germany than before the war.
This development left a situation where fuel prices suddenly seem disconnected from developments of upstream input costs. Searching for possible explanations, the German government has now asked the FCO to scrutinize this sector at all market levels (i.e., from the oil commodity market to refineries and wholesalers to the petrol station operators).
What to expect under the new regulation
According to the FCO, to analyse the competitive dynamics in the market, it requires access to more comprehensive data, including the quantities sold by the parties, and new powers of intervention to react more flexibly to market developments. The draft legislative changes will accommodate these needs in that the FCO shall be able to request real-time price and volume data (through the MTS-K) and further business information from all relevant market participants. The FCO will also be able to raid the premises of companies under suspicion of engaging in anti-competitive practice.
While it remains to be seen whether the FCO will also look into possible spill-over effects in the relevant trading and derivatives markets, it seems almost certain that the FCO will take a very close look at those intermediaries, which have access to the decreased oil commodity prices but refuse to pass on price decreases downstream to their relevant customers.
Given the relevance of fuel prices to both private households and businesses, the FCO is likely to make investigation of this sector one of its top priorities in 2022, and it will intervene where it suspects restraints to competition.
Also, the price increases for fuel have caught the attention of antitrust regulators in other countries. For example, the Italian competition authority has just launched an investigation into eleven Italian fuel distribution companies on suspicion of having exchanged competitively sensitive information to coordinate pump prices for almost a decade. Competition investigations into fuel prices are also taking place in Austria and Bulgaria. While the individual approach taken may vary between the different countries, the oil and fuel markets are generally likely to be in the spotlight of competition investigations in the foreseeable future.
How Reed Smith can help
- Reed Smith’s antitrust team can assist you with any aspects of these regulatory developments, including:
- Preparing for and complying with the new regulation
- Responding to requests for information
- Bringing your compliance systems up to date
- Preparing for possible dawn raids
- Representation in investigations
- Defence against enforcement action
- Coordinating the defence strategy regarding competition investigations in different countries
Client Alert 2022-099