EU: Oil, Biofuel Companies May Have Colluded on Price Distortion

EU: Oil, Biofuel Companies May Have Colluded on Price Distortion

May 14, 2013. Source: Frances Robinson, Wall Street Journal

BRUSSELS--The European Union's antitrust authorities raided the offices of oil and biofuel companies in two EU member states and Norway on suspicion of distorting prices, the EU Commission said Tuesday.

"On 14 May 2013, Commission officials carried out unannounced inspections at the premises of several companies active in and providing services to the crude oil, refined oil products and biofuels sectors," it said in a statement. "The Commission has concerns that the companies may have colluded in reporting distorted prices to a Price Reporting Agency to manipulate the published prices for a number of oil and biofuel products."

The Commission is also concerned that the companies may have prevented others from participating in the price assessment process, with a view to distorting published prices, it added. The prices assessed and published by Price Reporting Agencies serve as benchmarks for trading in the physical and financial derivative markets of 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 said.

The raids are a first step in investigating suspected anti-competitive practices and don't mean the companies are guilty of anti-competitive behavior. The Commission respects the rights of defense, in particular the right of companies to be heard in antitrust proceedings. There is no fixed timescale for proceedings.

Norwegian company Statoil ASA (STL.OS) said its Stavanger office had been inspected and it is "cooperating with the authorities in their inspection."

The suspected violations are related to the Platts' Market-On-Close (MOC) price assessment process that is used to report prices in particular for crude oil, refined oil products and biofuels, and may have been on-going since 2002, Statoil said.

Royal Dutch Shell PLC (RDSB.LN) also confirmed Tuesday that Shell companies are assisting the European Commission in an enquiry into trading activities.