European Commission asked to investigate alleged fuel cartel in Malta

The European Parliament’s petitions committee has asked the European Commission to conduct a preliminary investigation into complaints of an alleged cartel in the sale of fuel at Maltese petrol stations.

This follows a petition by the Malta Automobile Club that Malta is the only EU country in which the price of fuel is exactly the same at every petrol station, meaning that consumers do not receive any benefits from the competitive oil market.

“The import, storage and sale of oil and diesel should not be in the hands of government or state-owned companies, but instead it should be transferred to the control of foreign oil companies,” the MAC wrote in its petition. “The Prime Minister, the Energy Minister and the Economy Minister announce the price of liquid fuels in their budget talks three months before they enter into force. The government owns all oil stores, and the import of oil is mainly controlled by the state-owned Enemed Company Limited, although there are two private companies who also import diesel oil. The price of fuel is exactly the same at all service stations. Which other EU country has the same situation?”

Now, eleven months since the petition was lodged, the Petitions Committee has informed the Malta Automobile Club that its petition is admissible and that it has been forwarded to the European Commission to conduct a preliminary investigation.

MAC president Alfred Farrugia questioned why the Petitions Committee will not conduct its own investigation, arguing that the EC has already defended the practice, “bringing up all kinds of excuses no doubt fed by the local authorities”.

Suspicions of a fuel cartel on the island was raised last year after Rabat petrol station owner Mario Camilleri was pressured into revoking his decision to sell diesel 2c below the price established by government.

On the same day that he announced his decision, he was warned by Joe Falzon, owner of Falzon Group, which supplies diesel, that his higher profit margins would be withdrawn unless he backtracked on his decision.

However, the Malta Competition and Consumer Affairs Authority, the body tasked with investigating competition complaints, in October dismissed calls for an investigation into the alleged fuel cartel, arguing that “parallel behaviour alone between competitors is normally not sufficient to prove the existence of unlawful anti-competitive behaviour”.

“How could the Falzon Group, a minor importer, offer a higher margin of profit to retailers of diesel on condition that they sell it at the same price as that of Enemed?” Alfred Camilleri questioned. “Is it not obvious that Enemed is making an abnormal margin of profit on diesel as a result of its dominant position in the market?

He claimed that the government’s grip on the fuel market amounts to blatant discrimination against Maltese consumers.

“In which EU member state do we find all the prices of petrol and diesel exactly the same throughout the whole country? In which EU member state are the prices of petrol and diesel announced and fixed by government as is the case in Malta?

“In which other EU Member State are the storage facilities for the local market practically all owned by the government, or its state-owned companies? How can the local representatives of the foreign oil companies compete with Enemed when it or the government can increase the storage fees at will? How can the local representatives of the foreign oil companies compete with Enemed and plan their marketing strategies when the government can terminate the storage lease at will?

Moreover, he added that Maltese consumers are the only ones in Europe who have no idea what brand of petrol and diesel they are purchasing at the pump, and whether the unleaded petrol they are purchasing even contains ethanol.