Statoil has been forced to drop a price agreement with petrol retailers following a two year investigation by the Competition Authority. In a decision published today, the authority found Statoil's agreement to be 'anti-competitive'. The company denies it broke the Competition Act.
The Competition Authority's two year investigation examined a nationwide pricing agreement between Statoil and its retailers, concentrating on the pricing patterns of three Statoil petrol stations in Letterkenny. Two of the stations are no longer selling the Statoil brand.
Under the terms of the agreement, Statoil would subsidise its retailers if a nearby competitor's price was lower. But according to an internal memo, it would not subsidise its retailers to sell below the price charged by the competition. The Competition Authority's investigation found that across garages in Letterkenny there was little or no variation in price.
The authority found that this agreement may have harmed consumers by removing the incentive for other petrol stations to compete. It informed Statoil it intended to begin legal proceedings for breaches of the Competition Act but dropped its action following an undertaking from the company that its pricing agreement would be terminated.
Statoil denies its pricing policy broke the Competition Act. A company statement later expressed 'astonishment' at the authority's statement, saying Statoil had discussed and agreed its price mechanism with the then Department of Enterprise, Trade & Employment in 1996.
It pointed out that the competition body had decided not to initiate proceedings against Statoil under the Competition Act.
