Business

SA oil companies charged with price-fixing

Staff Reporter

The local units of several major oil companies have been charged with price-fixing by the Competition Commission.

BP is one of several major oil companies have been charged with price-fixing by the Competition Commission. (AFP)

Chevron, BP, Total, Shell, Sasol and Engen are all alleged to have shared detailed information about sales and customers to hinder competition from the 1980s until 2005.

The suspected collusion occurred with products like petrol, diesel, illuminating kerosene and other products.

"Information at this level of detail allowed the oil companies to closely track each other's sales and to align their strategies in the market, eliminating competition between themselves," the commission said on Wednesday.

Shared information ranged from monthly sales volumes of each oil company, per product category, to defined groups of customers in respective magisterial districts.

The commission concluded that the oil companies had engaged in price-fixing and market division in contravention of section 4(1)(b) of the Act.

"This also enabled them to divide or allocate markets by deciding not to enter, or compete for, certain geographic markets or customer groupings," the statement added.

The investigation started in January 2009 based on information received from various sources.

The commission has referred the matter to the Competition Tribunal – which rules on such cases – for adjudication, asking for a fine equal to 10% of each company's revenue in the preceding financial year to be levied.

"Price-fixing is about ensuring that competitive discounting from collectively understood pricing points is avoided," the commission said.

"The incentive to discount is to achieve higher sales; by tracking the market shares of each company any attempt to compete away customers by one oil company can be picked up and countered by the others. Such arrangements therefore undermine the incentive to compete in the first place."

.

Topics In This Section

Comments

blog comments powered by Disqus