Bulgaria, CPC finds competition issue in Lukoil’s fuel pricing policy

, SEE Energy News

Bulgarian Commission for the Protection of Competition (CPC) said that it has identified competition issues related to fuel wholesale pricing policy of Lukoil Bulgaria, which operates the only oil refinery in Bulgaria and holds a large share in the country’s fuel market.

According to CPC, Lukoil Bulgaria has implemented a margin squeeze against its competitors by gradually altering wholesale price terms and removing quantity discounts. This could prevent, limit or undermine competition on the fuel markets and harm consumers’ interests. A margin squeeze occurs where an undertaking with a substantial degree of market power reduces the margin between the price it charges for the input to its competitors on the downstream market and the price its downstream operations charge to its own customers, such that the downstream competitor is unable to compete effectively.

CPC has found that this kind of conduct of Lukoil Bulgaria represents a general strategy to limit wholesale trade in fuels in the country and thus strengthen the company’s dominant position on the wholesale market in fuels. Such conduct implies abuse of dominant position both under Bulgarian law and EU law, because it can affect significantly the pattern of trading among the EU member states.

Lukoil Bulgaria now has 60 days to submit in writing any objections to CPC’s conclusions.

CPC has launched an investigation into Lukoil’s pricing policy based on claims by other large players in the furl market – OMV Bulgaria and Insa Oil.