German antitrust watchdog flags price issues in the oil market
The German antitrust authority said on Wednesday that an examination of Germany's oil markets showed pricing issues. It called for stronger legal regulations on price quotes.
The Federal Cartel Office will launch an investigation in 2022 into the German refinery and wholesale market for fuels following Russia's invasion.
The two-stage investigation examined refinery pricing, fuel imports and supply chains as well as market behaviours. Its goal was to improve competition and price transparency within the sector.
The investigation revealed significant risks to the competition posed by price quotes, which are crucial in pricing the entire oil value chain.
In a press release, Cartel Office chief Andreas Mundt stated that "the investigations have again demonstrated that the conditions are difficult for a functioning competition in Germany's mineral oil sector."
Prices are often linked to wholesale contracts, and they can have an indirect impact on retail prices. These price quotations are provided by agencies that report prices, such as S&P Global Commodity Insights and Argus Media.
The investigation by the cartel office found that certain price quotes were based on limited information, and a few market participants dominated the reporting process. This raised concerns about possible price manipulation.
The report stated that "Accordingly to the investigations there are incentives to influence individual prices in a non-competitive way."
The Competition Watchdog recommends that price quotes be subject to stricter legal requirements and explores ways to protect them better from manipulation. It also said it would consider taking action and investigating price quotation risks.
The company expressed concern about the growing number of price variations at petrol stations. Prices will change 18 times per day by the year 2024. This is up from 4 to 5 changes in a decade. It said that frequent price changes reduce transparency and make finding cheap prices difficult for consumers. Reporting by Riham alkousaa, Matthias Inverardi and Lisa Shumaker; editing by Lisa Shumaker
(source: Reuters)
