The Bundeskartellamt has today published an interim report on its ongoing sector inquiry into fuels at the refinery and wholesale level.

Andreas Mundt, President of the Bundeskartellamt: "Our interim report provides a deep insight into the structures of the refinery business in Germany. We have gained much knowledge of how crude oil is procured, about refineries' costs and revenues as well as oil price formation and sales. This is an excellent basis for further investigations."

The report focuses on the key conditions regarding production and cost-relevant factors, information on capacity development and utilisation of refineries as well as the procurement of crude oil. The investigation looked into logistics, sales and customer structures as well as pricing mechanisms and contract structures. Companies were requested to provide internal documents, in particular on their cost and revenue situation and on the profitability of the refinery business.

The interim report also contains a comprehensive description and an initial assessment of possible reasons for the price development in recent months (both competition law relevant and non-competition law relevant).

The investigation was mainly initiated because of the persistent decoupling of prices charged at petrol stations from the crude oil price in the weeks and months following Russia's attack on Ukraine.

Andreas Mundt: "Our investigation has shown that this development is not based on cost increases alone, especially because most mineral oil companies generated considerable profits from their refineries during this time. We continue to see structural issues in the market, for example the fact that many companies are active across the value chain from the drilling hole to the petrol pump, and that market transparency is high also at the refinery and wholesale level. However, based on the current legal situation, we can only intervene in cases where there is an initial suspicion of anti-competitive practices. High prices and company profits alone are not a sufficient indicator of such practices."

There are currently no indications of price-fixing agreements between mineral oil companies. Abuse of dominance will only be investigated if a company is actually dominant, i.e. not exposed to a significant level of competition. There are a number of different players at the refinery and wholesale level. Further investigations will be required to analyse whether joint market dominance could be an issue at the refinery level. Even if the Bundeskartellamt were to determine that a level of dominance relevant under competition law exists, the legal hurdles to determine abusively excessive prices would be extraordinarily high. Prices are only deemed abusive under competition law if they are considerably higher than the prices which would have been charged in a context of effective competition. As a consequence, all other factors influencing the price, for example costs and scarcity effects due to a crisis, have to be identified and taken into account, and a forecast of a lower (hypothetical) price has to be prepared that proves viable under court review.

The upheaval on the markets caused by war and crisis has led to scarcity, which could be a significant factor for the price development on the markets over the recent months. Increasing demand for refined fuels causes prices to increase as well. For the time being, it is not possible to conclusively assess this situation. However, the interim report contains a comprehensive description and analysis of important factors, for example imports (from Russia and other nations) and exports of fuels, the development of international and national refinery capacities and regional influencing factors like refinery downtime and temporary transport difficulties.

Passing on energy tax reductions to consumers

The German government reduced the energy tax to the statutory minimum amount under European law between 1 June and 31 August 2022. For these three months, the energy tax on E5 and E10 decreased by a little under 30 cents per litre and approximately 14 cents per litre for diesel fuel. There was a lively debate on whether and to what extent this tax reduction was passed on to consumers. Various studies, most of which were based on a comparison of the price development in Germany and France, have now shown that the tax reduction was largely passed on to consumers. The Bundeskartellamt's investigation has reached the same conclusion.  

Outlook and further action

For this interim report the Bundeskartellamt conducted a survey among all companies active in Germany in the area of fuel production in refineries. The authority's investigations will be extended in a next step to include in particular the competitive situation in the sale of fuels at the wholesale level. Its assessment will also look into possible reasons for the price development. A more precise definition of the relevant product and geographic markets at the refinery and wholesale level will play a key role for the assessment under competition law. The Bundeskartellamt will also continue to investigate the concrete formation of prices.

Executive summary of the interim report in English