Bundeskartellamt takes first measures following its fuel sector inquiry and prohibits Total from acquiring 59 OMV petrol stations

29.04.2009

The Bundeskartellamt has prohibited Total Deutschland GmbH, Berlin from taking over the east German petrol station network of OMV Deutschland GmbH, Burghausen. The concentration is expected to strengthen the dominant positions held by Total together with Shell, BP, ConocoPhillips and ExxonMobil in the sale of diesel and Otto fuel in the relevant regional petrol station markets. Not only would Total's takeover of the east German OMV network increase the market share of the dominant oligopoly to 80 to 85 %, but it would also eliminate one of its strongest competitors.

This is the first measure taken by the Bundeskartellamt following the fuel sector inquiry which it launched last year (see press release of 28.5.2008). The focus of the inquiry lies with the upstream procurement markets, i.e. wholesale and production, which are the key to corporate success in the petrol station market. An important interim result of the inquiry confirms that the prevailing high vertical and horizontal concentration in the fuel sector poses a major obstacle to more competition. In particular, the five companies mentioned above are integrated at all levels of the mineral oil sector and are active not only at the retail level but also in the procurement markets and in the transport sector. Due to the oligopolistic market structures, further mergers involving these companies will not be possible in the future, or if so, only to a very limited extent.

The interim results of the fuel sector inquiry can be summed up as follows:

Structures prevail at all market levels which have a significantly restraining effect on competition in general.

Consequently, fuel sales at petrol stations are not only highly concentrated on the supplier side, but are also very transparent. However, this works primarily to the benefit of the integrated suppliers and hardly the motorists. As the fuel offered by the individual petrol station companies is largely identical and a high rate of price sensibility on the part of the consumers has been observed, price should basically play a very important competitive role. Nevertheless the companies‘ marketing strategy has never been based consistently on price but to a great extent on alleged and actual quality characteristics. Due to the high transparency and the ensuing possibility for the companies to monitor the prices of competitors, over time pricing patterns have emerged such as higher prices at the beginning of the travel season, which are set by the companies without any need for collusion or coordination and which are the visible expression of a chiefly uniform pricing strategy pursued by at least the members of the oligopoly. These pricing patterns are often misunderstood by motorists as the outcome of collusion.

In addition, the oligopoly members are interlinked with collective refineries, pipelines and tank farms and are interdependent on one another in a long practised system of fuel exchange. External competitors, among them the largely fragmented medium-sized mineral oil sector which is dependent on the members of the oligopoly for its upstream supplies, (“independent petrol stations”) are unlikely to be able to effectively limit the oligopoly's scope for action.

The Bundeskartellamt will shortly publish the individual interim results of the sector inquiry. Apart from the points already mentioned, the interim report will also include statements on the future market definition in the petrol station sector. It will also explain the modified calculation of market shares which the Bundeskartellamt can apply to gain a more accurate picture of competition intensity and to take greater consideration of motorists’ behavioural patterns. Finally, it will introduce a concept which will help to examine more closely accusations by medium-sized petrol station operators that they are hindered by the oligopolists in their activities.

In the next months the sector inquiry will also focus, amongst others, on examining the possible market foreclosure effects of fuel card systems and so-called branded reseller agreements as well as the situation at motorway petrol stations.

Apart from the merger which has now been prohibited, the Bundeskartellamt is examining two more merger projects in 2nd phase proceedings. These are the acquisition of the petrol stations of the medium-sized companies Lomo and Honsel by Shell Deutschland Oil GmbH, Hamburg. The time limit for decisions in both cases expires on 9 June 2009.

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