Press Release – Illegal Diesel contracts

The Consumers’ Association – Malta published a press release (see below for Maltese version) on the decision which was published by the Office of Competition regarding diesel service contracts between supplier and petrol station.

The case erupted in Jan 2015 when a petrol station reduced the price of diesel but had to revert to the set price after being pressured to do so by the supplier.  The Consumers’ Association had been pestering the Office to issue its decision for ages as this has a direct impact on both consumer benefit and the economy in general.  The Association in its original request to investigate this case also asked the Office to look into the market in general as we believed that this case was just the tip of an iceberg.

This week the Office of Competition published its decision mainly saying that

  • San Lucian Oil Company Ltd, member of Falzon Group Holdings Limited infringed Article 5(1)(a) of the Act by participating in an agreement with M&N Camilleri Petrol Station that had as its object the prevention, restriction or distortion of competition.
  • The Director General has no intention of imposing any administrative fines on M&N Camilleri Petrol Station, since the Office considers that this reduction  was benefitting consumers by selling diesel at a lower price than the maximum retail price.
  • With regard to Falzon Group, the Office had the intention to impose an administrative fine but in light of the judgement given by the Constitutional Court in the names of Federation of Estate Agents v Direttur Generali (Kompetizzjoni) et dated 3rd May 2016, the Office decided not to impose an administrative fine taking also into account the interpretation given by courts

In view of this the Association issued a press release saying that:

The Consumers’ Association is worried that effectively due to the court decision the Office of Competition is ineffective as it cannot impose any administrative fines as this is unconstitutional to impose fines under the present administrative setup.  It is consequently urging government to make the necessary legislative changes to enable the Office to impose fines.  The present situation is such that a company may infringe competition law with impunity.

– That this Office should have taken interim measures to ensure that the petrol station involved would be able to continue to offer the reduced prices to consumers.

– That this Office limited itself to investigate the case alone.  We noted that in our initial request we asked the Office to investigate all the contracts that are presently effective between petrol stations and their supplies.

The Consumers’ Association is perturbed with the situation especially in this sector as we are sure that this situation is present, for example, in other forms of fuels to the detriment not only to consumers’ interests but also to the whole economy.

10.10.16

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