The Competition Authority has found that Statoil's pricing arrangements with its retailers is anti-competitive following an investigation that took two years.
Following the decision of the Competition Authority (CA) to begin legal proceedings, Statoil has agreed to terminate its "Price Support Agreement" across the country and has also given a number of undertakings to CA not to introduce, or continue to implement any support scheme with elements that the Authority found objectionable.
Statoil Ireland Limited has consistently refuted any assertion that the Price Support Agreement breached the Competition Act.
According to Dr Paul Gorecki, Director of the Monopolies Division with the CA, the Competition Authority investigation has revealed an agreement that affects the price paid by consumers for petrol.
The Statoil agreement combined both a floor and ceiling on price and was in effect an incentive to avoid competition.
The Authority arrived at its conclusions following an extensive investigation that included:
- Evidence from interviews with petrol station owners in Letterkenny
- Survey of petrol prices on a number of dates from May 2001 to January 2002.
- Documentation obtained through summons from Statoil and its dealers in Letterkenny.
- A comprehensive economic analysis of the Statoil Price Support Agreement.
It concluded that price agreements would have the effect of reducing the incentive for petrol retailers to compete with each other.
Statoil agreed to terminate all arrangements throughout the State.
In a statement issued this afternoon, Statoil Ireland said it was astonished at by the Competition Authority' assertion that its price support mechanism breached the Competition Act 2002.
The company said it had dis cussed in detail and agreed its price support mechanism with the then Department of Enterprise, Trade & Employment in 1996 with a view to lowering petrol prices. The Competition Authority of the day was part of that Department.
It added that the price support mechanism put in place in 1996 was designed to ensure the lowest fuel prices possible their customers and involved Statoil financially supporting its independent dealers to offer lower prices to customers.
"Statoil wishes to point out that the Authority's decision of 8th December 2003 was not to initiate proceedings against Statoil under the Competition Act 2002, " the statement concludes
"Statoil remains committed to ensuring that its fuel prices represent best value for customers."