The Georgian Competition Agency has ordered country’s five largest petrol and diesel fuel retailers to pay total of GEL 51.6 million (about USD 22.7m) in fines for alleged price-fixing.
Announcing about the decision on July 15, head of the agency, Giorgi Barabadze, said that the companies were violating competition rules and regulations on retail petrol and diesel market in a period between 2008 and 2014 through “artificial import barriers” and cartel-type price fixing schemes.
Financial penalties, which can be appealed in court, were imposed on SOCAR Georgia Petroleum; Sun Petroleum Georgia; Rompetrol Georgia; Wissol Petroleum Georgia, and Lukoil Georgia.
SOCAR Georgia Petroleum, wholly owned by a firm where Azerbaijani state energy company SOCAR holds 51% of stakes, has been fined with GEL 14.38 million.
Sun Petroleum Georgia, which operates chain of petrol stations under the Gulf brand, has been fined with GEL 11.26 million. The company is affiliated with Petrocas Energy Group, where 49% of stakes is owned by Russia’s state-owned oil producer Rosneft.
Rompetrol Georgia, which is wholly owned by KMG International controlled by Kazakh state oil company KazMunaiGas, has been fined with GEL 10.84 million.
Wissol Petroleum Georgia, a member of one of the country’s largest business groups Wissol, has been fined with GEL 10.42 million.
Lukoil Georgia, subsidiary of Russia’s oil producer Lukoil, has been fined with GEL 4.74 million.
Three others companies, operating mostly on wholesale fuel market, were also fined with total of slightly over GEL 3 million: L Oil – GEL 1.2m; ETI – 1.17m and Binuli 1 – GEL 654,445. These three companies were among those fuel traders, which were target of suspected tax evasion investigation in February.
32 smaller companies operating in the same market were fined with GEL 200 each, according to the Competition Agency.
The companies have yet to comment, but head of the Union of Oil Products’ Importers, Vano Mtvralashvili, said the five largest penalty-hit companies’ position is that they have not violated the law on competition.
“After the companies receive and study files [from the Competition Agency], they will decide individually whether to accept this decision of [the Competition Agency] or to dispute it [in court],” Mtvralashvili said, adding that the companies will most likely appeal the decision in the court.
The Competition Agency said that financial penalties were imposed based on a 1,100-page report compiled by the agency as a result of examination of the retail fuel market, which was ongoing since November, 2014. The report, which is not yet available, has to be released by the agency within ten days; but the agency also said that some parts of the report will not be made public because issues related to companies’ commercial confidentiality are involved.
The Competition Agency claims that country’s five largest petrol and diesel fuel retailers have violated those clauses of the Law on Competition, adopted in 2012, which deal with price-fixing, practices that restrict market access, and market partitioning by territory or by customer.