TIRANA, Feb. 16 – Albania’s competition watchdog says it has failed to find evidence of an alleged oligopoly in the country’s fuel market, the overwhelming majority of which relies on imports and is carried out by only three to four companies.
“No evidence was found to prove banned deals or abuse of collective dominance among the probed companies,” said the Competition Authority after a thorough investigation into the fuel market for the January 2010 – April 2014 period which ended up with only several recommendations but no fines to the market operators.
“Competition in the import market and the wholesale trade of fuel is not efficient enough because of the market structures and the legal and by-law regulation of this market,” the authority said in a statement.
The probe into the domestic production, import and wholesale trade of fuel unveiled the fact that there exist excess stages in the market structure which don’t justify the added value in the chain starting with imports, special customs zones, wholesale and retail trade to reach the end consumer, causing an artificial increase in costs and a relatively low price elasticity.
“The high level of market concentration and the tendency for an increase in concentration in the import market, require structural market improvements and the interweaving of instruments beyond those by the Competition Authority, to prevent abuse and stop companies with a considerable market power to apply abusive practices which damage consumers.”
The Competition Authority has recommended the Albanian government to make legal changes allowing wholesale companies to also carry out retail sales directly in order to eliminate the extra stages in the trade chain and reduce unnecessary costs.
“Wholesale companies should also preserve the identity of the product and compete through their respective logos in retail sale points, to further promote competition.”
Another recommendation by the Competition Authority involves the establishment of a transparency unit on fuel prices which would require a legal basis and the necessary administrative infrastructure. The new changes would force companies operating in the production, import and wholesale trade of fuel to notify the transparency unit and the Competition Authority in real time for every change in the wholesale price.
Although a huge oil producer, Albania exports the majority of its domestic crude oil production due to poor quality.
With global fuel prices having more than halved since their peak level June 2014, but only slightly falling in Albania, a fierce debate has broke out in Albania where the situation is blamed on lack of competition and the rising tax burden on fuel.
The high fuel prices in Albania are not only a result of taxation, but also lack of competition and abuses in a market controlled by three operators, Erjon Braçe, the head of the parliamentary economy committee has warned.
“The market control by only three operators and an ordinance turning retail companies into agents of wholesale companies which determine prices and the poor quality of fuel has seriously endangered market competition,” said Braçe.
However, the Association of Hydrocarbons, representing Albania’s fuel importers, argues the situation is not a result of lack of competition by the increased tax burden.
This is a web news update; please look for an in-depth view on this topic in our upcoming Friday print edition.
