Monti plans talks on oil sector competition as blockade bites

Date: 14/09/00

By Peter Chapman

COMPETITION Commissioner Mario Monti will hold talks with member state officials later this month to discuss the oil industry as the escalating cost of petrol continues to spark protests across the EU.

Monti's aides insist that the seminar is not being organised because of the blockades mounted by lorry divers in several member states in recent weeks. They stress that the aim of the meeting is to boost the Commission's ability to investigate allegations of price-fixing abuses in future by encouraging national authorities to exchange key information.

However, news of the move comes after last weekend's informal meeting of finance ministers in Versailles, where European Commission President Romano Prodi and monetary affairs chief Pedro Solbes reacted to calls for Union action to boost competition by hinting that a probe could uncover signs of market abuses. Prodi said the Commission would not hesitate to act if it found sufficient evidence of wrongdoing.

A Monti spokeswoman downplayed the timing of the meeting, insisting it had been organised in response to oil price-fixing cases in Italy, Germany and Sweden and a glut of high-profile mergers in the sector earlier this year. "The Commission decided to organise this meeting to exchange information and to make competition enforcement more effective in the oil sector," she said. "The seminar had already been decided before this weekend, although it was not made public."

She added that the Commission had shown that it was not afraid to act to preserve competition by demanding key concessions before it approved the Exxon-Mobil and BP-Amoco deals in 1998 and 1999.

An EU-wide price-fixing investigation could be launched in the future, said the aide, although she added that the Commission had found that collusion in the petrol market tended to occur at the national level. "The Commission is not at the moment conducting an investigation, although it remains vigilant and is following the market because of its impact on the final customer," she said.

In Versailles, finance ministers called on the Commission "to work with the competent authorities to examine the way of increasing the current level of competition in the energy sector and, in particular, in the oil sector".

Prodi reacted by promising the institution would examine whether fuel companies were operating in markets shared between a handful of players. Solbes said electricity and gas sectors could also be scrutinised for evidence of anti-competitive behaviour.

However, financial analysts share Monti's caution. They do not expect him to find grounds for intervening in the EU petrol market, arguing that the protests have been fuelled by high crude oil prices, the drop in the value of the euro and oppressive government taxes - not by any wrongdoing on the part of energy companies.

Deutsche Bank's J.J. Traynor said that while most of the price of petrol was accounted for by taxes and only a small portion by profit, "the only thing that can give is the tax". Robin Berkeley, European director of government affairs for BP-Amoco, added: "We have a high regard for the judgement of Monti. But whilst we understand the political difficulties of the Commission and national governments, there is no easy solution."

He said the answer was an increase in oil production - something only Saudi Arabia and the United Arab Emirates appear in a position to do. But the presumed result, a drop in oil prices, would not filter through to Union citizens immediately. "We come back to the problem that EU governments have taken advantage of the easy opportunity to raise revenue from consumers," he added.Meanwhile, Union transport ministers have agreed to meet next Thursday (20 September) to discuss the fuel crisis.

Competition Commissioner Mario Monti will hold talks with Member State officials to discuss the oil industry as the escalating cost of petrol continues to spark protests across the EU.