Competition Authority drops Statoil threat

The Competition Authority has dropped a threat to take fuel company Statoil to court after the company agreed to end a price support policy for garage owners.

And last night, the Authority indicated it would pursue any other company using similar "anti-competitive" supports.

The Authority carried out a two-year investigation into Statoil's support for outlets in Letterkenny, Co Donegal. It determined that the price support agreement breached the Competition Act 2002.

Statoil last night responded angrily to the announcement of "alleged price-fixing" and "refuted" any suggestion that it had breached the Act. "Statoil discussed in detail and agreed its price-support mechanism with the then Department of Enterprise, Trade and Employment in 1996 with a view to lowering petrol prices."

However, a spokesman for the Department said such an agreement would have to have been notified to the Competition Authority, which was then a part of the Department. "I understand that no such notification ever took place," he said.

"Obviously papers from that time would have to be examined before any detailed comment could be made. However, the Department does not acknowledge the existence of any agreement with the company which would have permitted a price maintenance arrangement of the sort now objected to by the Competition Authority," the spokesman said.

The price support agreement set a "ceiling price", which was Statoil's recommended retail price and a "floor", the price charged by specific strategic rivals located nearby.

Statoil outlets dropping their price below a rival were not supported nor were those charging more than the company's recommended price.

The Competition Authority said the practice was anti-competitive. Rivals were less likely to cut their prices in search of market share knowing that Statoil would immediately match them. At the same time, there was no incentive for Statoil outlets to undercut their competitors.

Mr Paul Gorecki, director of the monopolies division of the Authority, said the outcome of the investigation should have "an impact for car owners across the country".

Although the investigation took place only in Letterkenny, Statoil has agreed to drop the practice across the State. Last night Statoil managing director in Ireland, Mr Tony Murray, said the practice reviewed by the Authority was already largely redundant under new EU rules.

However, he said the company continued to support its dealers.

"We're very annoyed at the situation and we're amazed that it came out," he said, characterising it as an attack on the integrity of the company. He said Statoil had always worked "above board".

He said the company had talked "amicably" to the Authority earlier this year and had proposed "technical changes" to the agreement, which the Authority had accepted.

The Authority states in its decision notice that Statoil's undertakings to "amend its behaviour" came after it had informed the company of its intention to initiate legal proceedings.