site.btaAnti-trust Authority Sees Competition Issues in Lukoil Bulgaria's Pricing Policy

The Commission on Protection of Competition (CPC) has identified competition issues related to the engine fuel wholesale pricing policy of Lukoil Bulgaria EOOD, which operates the only oil refinery in Bulgaria and holds a large share in the country's fuel market. The regulator had instituted proceedings against Lukoil on claims by OMV Bulgaria EOOD and Insa Oil EOOD, which also share in the domestic wholesale market in fuels, CPC reported on Thursday.

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 or "squeezes" 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 belongs to the vertically integrated Lukoil group which operates along the whole chain from fuel production to end-sale of fuel and owns highly developed storage and transport infrastructure that gives it a competitive advantage over the other companies active on the fuel markets in Bulgaria. It also holds a large market share and is the leader on the wholesale market in engine fuels.

Lukoil Bulgaria and the claimants have 60 days to submit in writing any objections to, or opinions on, CPC's conclusions.