Bulgaria’s antitrust watchdog launches fuel price probe

Bulgaria’s antitrust watchdog launches fuel price probe
By Dimitar Koychev in Sofia February 26, 2016

Bulgaria’s Commission for Protection of Competition (CPC) has launched an investigation into seven fuel retailers and the country’s sole oil refinery Lukoil Neftochim Burgas over suspected price fixing, a notice on the CPC’s website says.

Following a analysis of the sector, CPC said that the fuel retailers appear to be following identical pricing policies, maintaining prices protractedly at high levels and not reacting in a timely and adequate manner to declines in wholesale and manufacturing prices. The commission suspects that this may be the result of cartel agreements.

The fuel retailers targeted in the probe include the Bulgarian units of Royal Dutch Shell, Rompetrol, Hellenic Petrolleum, OMV, NIS Petrol and Lukoil, as well as Bulgarian Petrol.

With regard to the oil refinery, the CPC’s sector study has shown that it charges higher prices for automotive fuels for the domestic market, relative to the prices offered for exports, other factors being equal. “This could mean that the determination of producer prices of petroleum products in Bulgaria is being influenced by non-market factors,” the CPC says.

Lukoil Neftochim Burgas has an annual capacity of 9.8mn tonnes and is the largest refinery on the Balkan Peninsula in terms of crude oil processing capacity. Based in the southern Black Sea city of Burgas, it is the biggest company in Bulgaria in terms of revenues. In 2014, the refinery reported a loss of BGN532.1mn (€272.1mn) on revenues of BGN6.45bn.

Meanwhile, CPC also found the existence of administrative and legal barriers to fuel suppliers in the domestic market related to the operation of bonded warehouses in the country.

Many suppliers to not have their own bonded warehouses as they are not able to meet the legal requirements for building and registering such facilities, as well as having insufficient financial resources. The requirements for opening such a warehouse include capital of BGN500,000 and guarantees of up to BGN30mn for excise liabilities. CPC therefore pointed out that reviewing and easing some administrative requirements would encourage fuel imports in Bulgaria, increasing the competitive pressure on local suppliers.