Industry thanks EU for oil price-fixing probe

Key industry and political figures have welcomed the revelation that a formal investigation is underway by the European Commission into the issue of oil price-fixing.

In mid-May, EC officials carried out unannounced inspections at the premises of several European oil companies, including the London offices of BP and Shell, following allegations that price-rigging may have been occurring for over a decade.

A press statement released by the EC said: “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.

“Furthermore, the Commission has concerns that the companies may have prevented others from participating in the price assessment process, with a view to distorting published prices.

“Any such behaviour, if established, may amount to violations of European antitrust rules that prohibit cartels and restrictive business practices and abuses of a dominant market position…. 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 emphasised that the fact such inspections have occurred did not mean that the companies involved were guilty of anti-competitive behavior.

Prime minister David Cameron said it was “totally unacceptable for firms to fix prices and force consumers to pay more.” He added that the government was looking at how to ensure that anyone found to be manipulating prices felt “the full force of the law”.

But commentators expressed frustration that it had fallen to Brussels to take action, after the UK’s own Office of Fair Trading failed to act.

Robert Halfon MP, who has been campaigning for a full inquiry into alleged price-fixing by the OFT, called the body’s recent preliminary investigation into the issue “a limp-wristed, lettuce leaf-type inquiry.”

The UK’s Serious Fraud Office has since said it is “urgently reviewing” the situation.

Meanwhile, the Road Haulage Association said it was “delighted” that a formal investigation was underway.

RHA chief executive Geoff Dunning said: “Since the original fuel protests way back in 2000, we have been of the opinion that there should be far more transparency among the oil companies. Yet every time we raised the issue our concerns were dismissed out of hand.

“Last year we raised this very issue with the Office of Fair Trading, only to be told that, in their opinion, there was insufficient evidence to support such a claim. [The] news that the European Competition Commission have already begun a formal investigation is tremendously encouraging; for the motorist in general, the haulage industry in particular and the UK economy as a whole.”

He added: “All too often we use the EU as a scapegoat when it comes to the rules and regulations that surround the UK road freight industry. This is a time when we are pleased to be among the first to say ‘on behalf of UK hauliers, thank you Brussels’.”

Said fuel price campaign body FairFuelUK’s Quentin Willson: “It is to this country’s eternal shame that it’s taken European investigators to act on something that I and FairFuelUK spent months warning the government about.”

“The whole oil market needs much greater scrutiny,” Willson said. “I’ve said before that it’s an opaque market without any real accountability and badly needs an official watchdog with teeth – empowered to levy draconian fines. But if these allegations are true and the European Commission do find robust evidence, this is a price-fixing scandal that will make Libor look like overcharging in a sweet shop.”