The Competition Council in early July launched the Fuel Price Monitor application, which displays prices for all types of fuels (gasoline and diesel) in OMV, Petrom, Rompetrol, Mol, Lukoil, Socar and Gazprom networks across the country.
The fuel price monitor is available both as a web app, www.monitorulpreturilor.info, as well as a mobile application (IOS and Android) downloadable from the App Store and Google Play, offering multiple search, sorting and filtering features.
Immediately after this initiative had been announced, numerous debates occurred in the public space and the Competition Council supports the implementation of rules for all operators to display simultaneously the increases in fuel prices, in certain days and at established hours.
The Competition authority requests the adoption of this measure following a sector investigation on the retail fuel market in Romania which confirmed that the existence of one leader, which owns approximately half of the market, has a direct effect on how retail fuel prices change, this being, usually, the initiator of price changes. At the same time, each company constantly monitors the activity of rivals and reacts to their price changes. Thus, the competitor companies prefer to adopt a similar behaviour as the one of the leaders in terms of price changes, which often take place within 24 hours.
Legislative act establishing the number of weekly price increases
Under the conditions mentioned above, competition in the retail fuel trade market in Romania is reduced, which reflects on the level of retail fuel prices. Therefore, in order to increase competition in this sector, the Competition Council supports drawing up a legislative act to establish the number of weekly price increases, the days when such increases can be applied and the time of change, valid for all companies in the market, no restriction being imposed for price reductions, being allowed at any moment.
The level of competition is also influenced by a number of structural factors, specific to the retail fuel market in Romania, of which the most important is represented by the very high degree of market concentration: a restricted number of oil companies that own approximately 90% of total fuel sales.
From the analyses carried out, it resulted that prices at the pumps were correlated during 2014-2018 with the international quotations of petroleum products (gasoline and diesel), price changes in Romania closely following the international evolutions in terms of both increases and decreases. As far as the structure of the fuel price is concerned, the data show that the excise duty and VAT account for a significant share, of about 50% of the final price.
According to recent data published by the European Commission, Romania is among the European countries where the final prices, with taxes, are much lower than the European average for both gasoline and diesel. In terms of tax-free prices, the price of gasoline is also below the European average, while diesel prices fluctuate around the European average.
Competition could increase by improving the permitting process for the construction of filling stations and the entry into the fuel market of hypermarkets/supermarkets.
Without the same operator twice on the same motorway section
The Competition Authority also recommends the competent authorities (CNAIR, ANAP) to analyse the possibility of modifying the legislation so as to avoid situations where a company operating a station on a motorway section builds another station located before or after the initial station. In this way, competition will be stimulated locally, and the consumer will be able to choose the most advantageous offer.
At the same time, the Competition Authority encourages companies to inform it of any barriers to entry into the market they are facing, so that they can be subject to analysis and, where appropriate, to allow the identification of possible solutions to facilitate entry on the retail fuel market. Moreover, the Competition Council considers the NAMR decision to set the reference price for crude oil extracted in Romania depending on Brent quotation from the previous month is opportune. This type of oil responds to the conditions on the European market and is also relevant for the Romanian fuel market, and it is therefore normal to be considered when establishing royalties for oil extracted in Romania.
In conclusion, the Competition Authority considers that the increase in petroleum royalties will intensify the competitive pressure on the market, in conditions in which no barriers are created in the way of import of motor fuels in Romania.