2nd UPDATE: Regulator: German Gasoline Market Lacks Competition
April 29 2009 - 10:00AM
Dow Jones News
Germany's Federal Cartel Office Wednesday said an ongoing
investigation into Germany's gasoline and diesel market has found
the market is dominated by a few companies and further expansion of
this oligopoly is unlikely to get antitrust approval.
The regulator said the oligopoly comprising the "vertically and
horizontally integrated" players Total SA (TOT), Royal Dutch Shell
PLC (RDSA.LN), BP PLC (BP), ConocoPhillips (COP) and ExxonMobil
(XOM) already controls a a large part of the German gasoline and
diesel market.
The strong concentration of the market represents a "meaningful
obstacle" to competition, the cartel office added.
"On all market levels there are structures that strongly dampen
overall competition," the cartel office said in a written
statement.
All of the named companies which comprise the oligopoly are
active in retail as well as procurement and transport of gasoline
and diesel, the cartel office said.
Due to the current market structure a further expansion of the
dominant companies through mergers and acquisitions will in future
be very difficult or approved conditionally, the cartel office
added.
The regulator has a similar stance on the German electricity
market, which is dominated by four utilities which concentrate more
than 80% of the country's power generation capacity. The two
dominant utilities E.ON AG (EOAN.XE) and RWE AG (RWE.XE) have such
dominant market positions the cartel office has previously said
they're effectively barred from further expanding their businesses
in Germany.
As a first consequence of the gasoline and diesel market
investigation the cartel office Wednesday decided to block plans by
Total Deutschland GmbH, the German unit of Total SA (TOT), to
acquire 59 filling stations from Austria's OMV AG (OMV.VI).
Total's plan to acquire the OMV filling stations would have
given the oligopoly a market share of between 80% and 85% and would
have eliminated OMV as "one of the strongest competitors," the
cartel office said.
The cartel office further said it is still probing two other
expansion projects Shell is pursuing.
Shell Deutschland Oil GmbH plans to acquire filling stations
from the medium-sized companies Lomo and Honsel.
The deadline for the cartel office's decisions on these
acquisition plans is June 9, it added.
The gasoline and diesel sector was initiated after the regulator
received complaints from consumers and independent gas station
operators who had repeatedly complained about how quickly major gas
station operators react to price increases by competitors.
The cartel office Wednesday said the strong concentration of the
market and its high degree of transparency favors the dominant
companies rather than consumers.
The incumbents' marketing strategies to a large degree focus on
differences in the quality of their products rather than pricing,
the cartel office said. It added prices are generally more crucial
in terms of competition.
The cartel office also criticized the existence of "certain
price setting patterns" such as increases shortly before holiday
seasons.
"These (price setting patterns) are often misunderstood by
motorists as price fixing," the cartel office said.
It said it plans to present provisional results of the sector
investigation "shortly."
Company Web site: www.bundeskartellamt.de
-By Jan Hromadko, Dow Jones Newswires; +49 69 29 725 503;
jan.hromadko@dowjones.com