EU investigates possible oil-price manipulation

By Victoria May 16, 2013 12:44

EU investigates possible oil-price manipulation


The European Commission raided the offices of BP, Royal Dutch Shell and Norway’s Statoil, as well as the oil-price reporting firm Platts, which administers the Brent oil contract of several oil industry-related companies, on May 14 as part of an investigation into possible petroleum price fixing.

In a statement, the Commission expressed its concern that “the companies may have colluded in reporting distorted prices to a Price Reporting Agency [Platts] to manipulate the published prices for a number of oil and biofuel products” and the companies may also “have prevented others from participating in the price assessment process, with a view to distorting published prices”.

The prices assessed and published by Price Reporting Agencies, such as Platts, serve as benchmarks for trade in the physical and financial derivative markets for a number of commodity products in Europe and globally. Even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and biofuels purchases and sales, potentially harming final consumers.

The Commission issued a very stern warning to the companies involved that if any such behaviour is established, it would “amount to violations of European antitrust rules that prohibit cartels and restrictive business practices and abuses of a dominant market position”. It added however that unannounced inspections are a “preliminary step to investigate suspected anticompetitive practices” and such inspections “do not mean that the companies are guilty of anti-competitive behaviour nor does it prejudge the outcome of the investigation itself”.

During the raids in the EU, Commission officials were accompanied by their counterparts from the relevant national competition authorities. In the EEA Member State, Commission officials accompanied their counterparts from the EFTA Surveillance Authority and from the national competition authority.

There is no legal deadline to complete inquiries into anticompetitive conduct. Their duration depends on a number of factors, including the complexity of each case, the extent to which the companies concerned co-operate with the Commission and the exercise of the rights of defence.

A Royal Dutch Shell spokesperson said: “We can confirm that Shell companies are currently assisting the European Commission in an enquiry into trading activities” and that it is “fully cooperating with the investigation”.

BP also stated that the company was “cooperating fully” with the investigation.

Statoil’s Stavanger office was inspected by the EFTA Surveillance Authority (ESA) and the Norwegian Competition Authority (Konkurransetilsynet) for the European Commission. Statoil stated that it is “cooperating with the authorities in their inspection”. The company statement added that the “suspected violations are related to the Platts’ Market-On-Close (MOC) price assessment process, used to report prices in particular for crude oil, refined oil products and biofuels, and may have been on-going since 2002”.

Platts too has commented that “the European Commission has undertaken a review at its premises in London this morning in relation to the Platts price assessment process” and that
“Platts is cooperating fully with the European Commission’s review”.

By Victoria May 16, 2013 12:44
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