January 2, 2014
On my daily media sweep earlier today, this interesting Competition Bureau contribution to an OECD study on competition and gasoline caught my eye (OECD Policy Roundtables – Competition in Road Fuel (2013)). Given Canadian consumers’ apparent continued consternation with gas prices, this is a fairly interesting and timely read I thought.
The Bureau’s contribution to this OECD report includes discussions of the Bureau’s merger control (e.g., the Petro-Canada/Suncor transaction), civil and criminal competition enforcement (e.g., ongoing Quebec gas price-fixing investigation and alleged price gauging by major incumbents), market study and advocacy efforts in Canadian retail gas markets.
Interestingly, the Bureau’s contribution also includes a discussion of its Quebec and Ontario gas price-fixing investigations, including fine and imprisonment statistics, enforcement (e.g., wiretaps and reliance on its Leniency Program) and planned continued enforcement in 2014:
“Enforcing the conspiracy provisions in the Canadian gasoline market continues to be a high priority for the Bureau. For example, in addition to the convictions secured to date, further criminal proceedings are scheduled in 2014 for other parties to the gasoline price-fixing cartel in Quebec, including Irving Oil and a number of individuals.”
Abstract – OECD Roundtable, Competition in Road Fuel (2013):
“In recent years, crude oil and gasoline prices have increased sharply. Such a price increase affects consumers’ budgets as well as the economy as a whole. Both the public and policy makers become acutely interested in determining the causes underlying such price increases and often turn to competition agencies to understand whether these result from anticompetitive practices.
In a number of OECD countries, road fuel markets are considered competitive at the retail level, with price levels and volatility reflecting fundamental demand and supply factors. However, competition problems in road fuel markets may occur when the market structure is characterized by a small number of vertically integrated players with high barriers to entry.
A key question for competition authorities is how to distinguish lawful from unlawful conduct in the absence of direct evidence of an agreement. Special price patterns that are often surmised to be signs of competition problems, such as parallel price movements, price cycles and so-called “rockets and feathers” pricing, were also discussed during the roundtable.”
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