Global Competition Review: Russia’s competition watchdog has said five petrol companies illegally fixed fuel prices in the politically contentious region of Crimea

20.06.2016

Russia’s competition watchdog has said five petrol companies illegally fixed fuel prices in the politically contentious region of Crimea.

The Federal Antimonopoly Service last Friday said Crimoil, Riteil-Yug, Kedr, Trade House and JSC simultaneously hiked the price of diesel and A-92 and A-94 graded gasoline products at their petrol stations, and ordered the companies to “eliminate the violation”.

A full decision is currently unavailable, but in a statement the enforcer said it had “seen signs” of a cartel between the five companies as it monitored the retail and wholesale prices of light oil products in the region.

The FAS said the companies had increased prices by the same amount across brands, regardless of the petrol seller, its customers, and each company’s business costs. This establishes an antimonopoly law violation, and “confirms the intent and direction of these actions to limit competition,” the enforcer said.

The Republic of Crimea was broadly considered an autonomous region in Ukraine until March 2014, when its leaders signed a treaty declaring its accession to the Russian Federation. The FAS established a territorial competition directorate within Crimea a month after that treaty was signed, and launched its investigation into the petrol companies in November 2015.

The FAS had initially accused the companies of taking part in anticompetitive concerted actions, although in its final decision last week it said they had entered into a cartel agreement.

Vitaly Dianov at Goltsblat BLP in Moscow said that to the best of his knowledge, most of the companies listed are small or medium-sized and have no direct link with any well-known oil company in Russia; he said that “it seems they are still learning how to abide by Russia’s antitrust laws.”

The only evidence the FAS has disclosed against them is that they simultaneously raised their prices, he said. “While this is enough to trigger an investigation, it is not enough to prove a cartel agreement.”

If the petrol companies appeal against the FAS’s decision, the authority will have to present more evidence to prove a cartel infringement, Dianov said.

Ukrainian competition lawyer Igor Svechkar at Asters in Kiev said the Ukrainian enforcer currently lacks jurisdiction in Crimea, and said he believes that “there is no Ukrainian aspect to the matter at all.”

In recent years the Ukrainian enforcer has investigated companies operating in the oil sector – including within the Crimean region – several times. Last month, the enforcer sent a statement of objections to WOG, OKKO, Shell and Socar over allegations the petrol companies were colluding on fuel prices.

The companies investigated by the Ukrainian authority are different from those that were probed by the FAS, Svechkar noted.

However, there is a commonality among competition authorities in the Commonwealth of Independent States – a regional block comprised of 10 former Soviet Republics – on how to assess price similarities. These competition authorities tend to assess pricing similarities among competitors as “conscious parallelism", and deem it concerted behaviour, he said.

A Ukrainian competition lawyer who wished to remain anonymous said that from a Ukrainian competition law perspective, Russia’s FAS lacks jurisdiction over Crimea.

“Obviously, I suspect that the FAS and the Russian government may have a different view on this,” the lawyer said.

Ukraine’s competition authority did not respond to a request to comment on this article. JSC did not respond to a request for comment. The other companies were unavailable for comment before press time.

By Sonya Lalli

http://globalcompetitionreview.com/article/1067950/russia-moves-against-crimean-oil-cartel

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