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U.K.: Complications in gas pricing may mean difficulty in proving price manipulation

By  |  November 30, 2012

A major investigation into the alleged price-fixing of U.K.’s gas market may be difficult to wield convictions and behavior changes within the market, according to some experts. Further, the recent remarks in the media that the scandal was comparable to the Libor price-fixing scandal may be difficult to prove, as the liquid market of the gas sector makes it difficult to report prices other than rates where it’s trading, according to the CEO of the London Energy Brokers’ Association Alex McDonald. As explained in the report, journalists aggregate gas prices for delivery at deal and bidding levels, then compare those levels to trade rates on Trayport Ltd.’s online platform which aggregates trading prices of gas. Ideas have been bounced around to force the trade into an exchange to improve transparency of the industry, though experts say that the aggregated costs of gas trading would ultimately end up higher, resulting in consumers paying more. The entire process means that antitrust regulators may not be able to easily prove the alleged manipulation of gas prices.

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