KZK finally discovers cartel on the fuel market
A year-long investigation by the regulator finds price fixing
This article is part of K Quarterly # Issue 1 / November-January 2017. Contact us for subscription options on email@example.com
The Commission for Protection of Competition (KZK) filed a price-fixing claim against six fuel retailers in October. Lukoil Bulgaria EOOD, Eco Bulgaria JSC, Shell Bulgaria EAD, OMV Bulgaria OOD, Nis Petrol Ltd. and Petrol were found to have exchanged price information, conducted a common pricing policy and shared information about their sales in order to prevent or distort competition in the fuel market.
KZK published the results of its year-long investigation against the fuel retailers just three weeks before the presidential elections. The pricing policy of the fuel retailers – the so-called "rocket and feather" approach, has long angered consumers. When oil prices rose, retailers immediately passed on the full increase to consumers, causing the price at the pump to soar like a rocket. But when the price of oil fell, prices at the pump dropped like a feather, while retailers profit from the increase margin between the wholesale and retail prices (see the graph). Everyone could see that the prices at all gas stations in Bulgaria were changed daily in a perfectly coordinated manner.
This approach changed recently, partly as a result of the KZK investigation, partly as a result of the growing influence of the gas stations owned by Vesselin Mareshki, a maverick businessman who shattered some of the established practices on the fuel retail market. Gas and diesel are 20% cheaper at his VM gas stations compared to the prices of major retailers nationwide. The peers of Mareshki accuse him of allegedly selling smuggled fuel or evading tax payments. Allegations aside, the spread of the VM brand has led to considerable regional price differences.
The fuel retailers will probably appeal the KZK conclusion before the Supreme Court.
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