Germany’s Competition Watchdog Urges Tighter Controls on Oil Prices

Germany’s competition watchdog has called for stricter regulation of oil price quotations, citing concerns over potential manipulation due to limited data sources, according to Reuters. The Federal Cartel Office, which has been investigating the issue since 2022, highlighted that pricing in the oil market is often based on a small number of transactions, making it vulnerable to distortion.

Price quotations, which influence wholesale procurement contracts and indirectly affect retail fuel prices, are provided by agencies such as S&P Global Commodity Insights (Platts) and Argus Media. However, per Reuters, the cartel office’s findings revealed that a limited number of market participants played a dominant role in reporting price data, raising concerns about potential anti-competitive practices.

“According to the investigations, there are incentives and opportunities to influence individual price quotations in an anti-competitive manner,” the report stated.

The Federal Cartel Office’s inquiry, launched in response to price fluctuations following Russia’s invasion of Ukraine, consisted of a two-stage examination into refinery pricing, fuel imports, supply chains, and broader market behaviors. The goal was to improve market transparency and promote competition in Germany’s fuel sector.

Read more: Regulators Approve Conditions for Multibillion-Dollar Oil Mergers

“The investigations have once again shown that the conditions for functioning competition in the mineral oil sector in Germany are difficult,” said Andreas Mundt, head of the Cartel Office, in a statement.

Germany’s Economy Ministry declined to comment on the findings, according to Reuters. Meanwhile, Michaela Westrup, an antitrust expert at Reed Smith, noted that the watchdog has held expanded powers since 2023, allowing it to intervene even when no direct antitrust violations exist but structural market distortions are apparent. Westrup pointed to concerns over oil pricing since Russia’s invasion of Ukraine, as fuel prices in Germany remained high despite falling wholesale costs globally.

“(The Cartel Office) will certainly take a closer look itself and could carry out an investigation of individual players,” Westrup told Reuters.

The competition authority recommended implementing stricter legal requirements for price quotations to safeguard against manipulation. Additionally, it raised concerns about the frequency of price changes at petrol stations, stating that by early 2024, fuel prices were being adjusted around 18 times per day—up from just four to five times a decade ago. Such frequent changes make it harder for consumers to make informed purchasing decisions.

Source: Reuters