The German antitrust watchdog wants to regulate the oil market more.

The German antitrust authority called for stronger regulation on the price quotes used on the oil market after an investigation showed that pricing was based on limited information which could be manipulated.

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 in certain cases, a few market participants were able to dominate 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."

In response to the price changes following Russia's invasion in Ukraine, the Federal Cartel Office began its investigation into Germany's wholesale fuel and refinery market in 2022.

The two-stage investigation examined refinery pricing, fuel imports and supply chains as well as market behaviours in order to improve competition and price transparency.

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."

The German Economy Ministry has declined to comment.

Michaela Westrup is an antitrust attorney at Reed Smith. She said that the Cartel Office now has new powers, which, under certain conditions, allow it to intervene when there are no antitrust violations but market distortions.

Westrup stated that oil prices were a concern for Germany after the Russian invasion of Ukraine, when prices first surged then dropped worldwide. Retail fuel prices in Germany remain high despite declining wholesale costs.

Westrup said, "(The Cartel Office will) certainly take a closer and may even carry out investigations of individuals players."

The Competition Watchdog suggested on Wednesday that the legal requirements for price quotes be tightened and that they should be better protected from manipulation. It also said it would consider taking action.

The company expressed concern about the number of price increases at petrol stations. It said that by the start of 2024 prices would be changing 18 times per day. This is up from 4 to 5 changes per day a decade ago.

(source: Reuters)