On 12 April 2022, the FCO announced that it would initiate a sector inquiry “with a clear focus on the refinery and wholesale level”. Under the German Act against Restraints of Competition, the FCO may conduct sector inquiries where it suspects anti-competitive behaviour in an entire industry. Although sector inquiries do not target individual market participants, measures against individual companies are often a consequence of the market insights the FCO obtains following the inquiries.
In general, the hallmarks of a sector inquiry include the FCO’s decision to initiate it, requests for information addressed to market participants, and the FCO’s interim and final reports. Otherwise, there is no clear, formal procedure and there are no specific deadlines (at least not on the FCO’s part). As a result, the process may vary in length, but usually takes between one and three years. In the course of sector inquiries, the FCO may request documents from the parties concerned and carry out inspections at company premises.
Back in 2008, the FCO launched a sector inquiry into the German fuel sector and investigated the market at all levels, i.e., production (refining of crude oil), wholesale distribution and retail (petrol stations), with the main focus on the retail market. According to the FCO’s final report in 2011, the leading oil companies allegedly formed a dominant oligopoly accounting for approx. 65 per cent of all fuel sales in Germany.
In 2012, related antitrust concerns prompted the FCO to launch another sector inquiry, this time focusing on the wholesale fuel market, i.e., the market upstream of petrol stations. However, this investigation was never completed; a sudden easing of fuel prices in Germany may have caused the FCO to pause its investigation.
In 2013, the FCO then set up the Market Transparency Unit for Fuels (Markttransparenzstelle für Kraftstoffe – MTS-K), requiring petrol station operators to report changes in Super E5, Super E10 and diesel prices to the MTS-K in real time. The price information collected by the MTS-K is continuously passed on to third-party consumer information services, which in turn make this information available to consumers via online applications.
Fuel prices in Germany have been increasing again since 2020. And now the war in Ukraine has pushed up prices massively, leading to loud calls for antitrust intervention in addition to other remedies.
With only 12 market participants, the German refinery market continues to exhibit a substantial degree of concentration, with a significant level of vertical integration. In the FCO’s view, the nature of this structure may make antitrust infringements more likely, because, according to competition theory, markets with these characteristics can facilitate unlawful collusion or abuse of a dominant position.
As a result of the new sector inquiry, the FCO will not only be able to follow up on findings from previous inquiries, but may also obtain even more extensive market data from the MTS-K in the future. Unlike in 2012, the current inquiry should therefore produce results sooner rather than later, and also potentially result in targeted enforcement measures.
Oil refinery owners and wholesale fuel suppliers should therefore prepare for considerable attention from the FCO in the near future; certainly, it is not a bad time for companies to make antitrust compliance a top priority and to align their strategies for dealing with any upcoming investigations.
Client Alert 2022-110