Anti-trust chief laments government inaction on fuel prices

CNC made 23 recommendations in a report issued in October

Spain’s anti-trust body on Tuesday chided the government for failing to act on a series of recommendations it made last year to enhance competition in the fuel-supply sector with a view to lowering the prices paid by consumers.

In a report filed in October with the Economy and Industry ministries, the National Competition Commission (CNC) made 23 specific recommendations aimed at cutting oil companies’ margins for fuels, the prices of which had shot up despite the drop in consumption because of the economic crisis and the stabilization of crude oil prices.

The report claimed the sector was insufficiently regulated and pointed to an increase of 20 percent in oil firms’ profit margins in the period 2007-2010, during which Spain suffered its worst recession in living memory. The margins were much higher than those enjoyed by companies in comparable countries both for gasoline as well as diesel.

At the time of the report, Industry Minister José Manuel Soria pledged to have the current legislation modified to take on board some of the suggestions of the CNC. “As of today, none of the [recommended] measures have been put in place,” the CNC’s president, Joaquín García Bernaldo de Quirós, said in an appearance before Congress in Tuesday, during which he presented the watchdog’s annual report.

The CNC’s report amounted to a crushing indictment of the power wielded by oil firms Cepsa, Repsol and BP. They are effectively able to fix prices by blocking the entry of new competitors. It also highlighted the influence the three leading companies have in CLH, which has a monopoly on the distribution of fuels, in which they remain shareholders.

The supervisor also recommended cutting the red tape of local administrations on setting up new service stations to favor the entry of new operators, reducing the contract period for the exclusive supply of fuels to service stations, and banning oil companies from issuing recommendations on prices to be charged to end users.

The CNC has made four reports of the sector since 2009, including two in 2012 on which the former Socialist government and the current Popular Party administrations have turned a deaf ear.

In its annual report for last year, the CNC imposed fines of 242 million euros, a record amount for the five years it has been in existence in its current form. The watchdog carried out 31 probes last year.

In his testimony to Congress, Bernaldo de Quirós took exception to plans to fold the CNC, the National Energy Commission (CNE) and the Commission for the Telecommunications (CMT) into a single regulatory body.

“There is no precedent of public agencies on an international level that combine the regulation of sectors (of the economy) with the supervision of competition, which up to now have been the responsibility of the CNC,” he said. “Getting the model right is critical in preventing the levels that have been achieved in protecting competition in Spain from deteriorating.“

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