Competition body may focus on Maxol

Fuel company Maxol may find itself in the firing line following the Competition Authority agreement with rival Statoil to scrap a price support mechanism for garages it supplies

Mr Paul Gorecki, director of the monopolies division of the Competition Authority, said that, following the Statoil decision, the authority would examine any similar arrangements that came to light in the retail petrol market. He referred specifically to Maxol and arrangements in place at the time of its takeover of Estuary Oil.

Maxol expressed surprise that the authority should indicate "certain intentions regarding this company without having the courtesy of notifying us first".

Chief executive Mr Tom Noonan said he was happy to stand over the arrangements his company had in place.

"We were not asked to change our arrangements at the time our takeover of Busselle Limited (Estuary Oil)," he said, although he acknowledged that the authority had expressed reservations about its arrangements with dealers at the time.

He said there were significant differences between the arrangements in place with the garages it supplies and the Statoil scheme at the centre of the Competition Authority investigation.

The Statoil inquiry centred on three issues:

the presence of "marker" stations, competitors operating close by and seen as strategic rivals in pursuit of market share;

the setting of a "floor" or minimum price below which Statoil supplied dealers could not sell;

the existence of a "ceiling" price, Statoil's recommended retail price above which the dealers could not sell.

It found that floor and ceiling prices within which Statoil was prepared to subsidise operators to ensure they remained competitive with the market stations was anti-competitive. It gave rivals no incentive to lower prices, the authority said, and gave Statoil operators no incentive to undercut competitors.

Statoil has said it strongly refutes any allegation of price fixing and insists its arrangements were both within the law and sanctioned by the Government.

Mr Noonan said: We have never asked operators to sell below or above certain prices. In fact, the letters we send out with every change in our recommended retail price states that they are at liberty to set their own prices." He said the only similarity between it and Statoil was that they both give customers assistance by way of rebates if they found themselves in difficulty in a very competitive market.

He added that this was known to the Competition Authority and pointed out that it was already investigating Statoil at the time last year when the Estuary deal was approved.