WRITTEN QUESTION E-2149/00

by María Sornosa Martínez (PSE) and Luis Berenguer Fuster (PSE) to the Commission

(30 June 2000)

Subject: Petrol in Spain market structure and the price of fuel

The structure of the fuel sector in Spain has oligopolistic characteristics. The top three companies, for example, (Repsol, Cepsa and BP) between them have a combined market share of almost 85 %. In addition to this, long-term contracts are agreed between suppliers and distributors which use legal fictions such as the establishment of surface rights and the sale of land with a repurchase agreement to exceed the time limit of ten years for exclusive purchase contracts. This, combined with the structure of the market and obstacles to the construction of petrol stations in the form of legislation on planning and road infrastructure,

results in a closed market with barriers to entry. In these circumstances, the ground is ripe for price fixing agreements, and allegations of vertical price-fixing are commonplace. There is certainly little competition in the fuel sector, and there are grounds for the suspicion that some of the practices used are in breach of Articles 81 and 82 of the Treaty.

In recent months the price of fuel in Spain has increased disproportionately, to the point where it is now the highest in Europe in relation to purchasing power. In view of this situation, the Vice-President of the Commission indicated to the Spanish press that the Commission intended to open an investigation, although these reports were immediately denied.

Is the Commission investigating whether the increases in fuel prices in Spain constitute collusive practices?

In the Commission's opinion, is the fuel market in Spain sufficiently competitive?

What measures should be taken to increase competition in this sector?

Answer given by Mr Monti on behalf of the Commission

(2 August 2000)

With regard to the first part of the question, the Commission would inform the Honourable Members that the Spanish competition authorities are currently investigating agreements or practices in the fuel distribution sector which could be contrary to Community and Spanish competition rules. In accordance with the principles laid down in the Commission notice on cooperation between national authorities and the Commission in handling cases falling within the scope of the Article 81 and 82 of the EC Treaty (former Articles 85 and 86)(1), national competition authorities generally deal with cases where presumed competition restrictions impact mainly on their country.

The Commission has recently adopted a new policy on vertical restrictions which will produce changes in the petroleum products sector(2). The most significant change will be that the maximum duration of exclusivity agreements between distributors and service stations will be reduced from 10 to 5 years, if firms wish to take advantage of an exemption by category under this type of agreement. A beneficial effect of the change will be that retailers of petroleum products will be able to change suppliers more often on expiry of the five-year contract and new operators will be able to enter the market. The Commission will ensure that this new policy is applied properly.

With regard to the increase in the price of fuel in Spain, the Commission would refer the Honourable Members its answer to Written Question E-1881/00 by Mr Knörr Borràs(3).

With regard to the second and third parts to the question, the Commission would point out that it cannot express any view on the level of competitiveness of the fuel distribution sector in Spain or on the measures which, where appropriate could help increase competition in the sector. That is a matter for the Spanish authorities, without prejudice to Article 98 (former Article 102a) et seq of the EC Treaty. Thus, the Commission would refer the Honourable Members to the Commission recommendation on the broad guidelines of economic policies for the year 2000, adopted on 11 April 2000(4).

The Commission would assure the Honourable Members that it will continue to see that Community competition law and internal market regulations are properly applied to this sector.

(1) OJ C 313, 15.10.1997.

(2) Commission Regulation (EC) No 2790/1999 of 22 December 1999 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices (OJ L 336, 29.12.1999).

(3) OJ C 72 E, 6.3.2001, p. 140.

(4) COM(2000) 214 final.