Q Last month was the deadline for submissions to the Office of Fair Trading (OFT) for its short inquiry into the petrol retailing sector. What happens now?
A The OFT will now go away and review the submissions it has received, seek further information from industry players and consider whether there is sufficient evidence to take further action in the sector. The OFT’s objective will be to undertake as thorough a review as possible before issuing its report early next year.
Q What is the aim of the inquiry? Who will be involved? What exactly will they be looking for?
A The objective of the OFT is to identify whether there are competition problems in the sector and if so, to decide how best to tackle these. The inquiry is in response to the recent and significant public concern about petrol prices. The OFT’s principal concern is whether consumers are being harmed.
The OFT has stated that it is looking at whether reductions in the price of crude oil are reflected in prices at the pump and it also wants to examine whether the role of supermarkets and large oil companies is having a damaging impact on competition in the sector in particular whether they are making it more difficult for independent garages to compete.
However, the review has also been driven by competition authorities in Germany, Spain and Australia taking a close look at the sector and finding a number of competition problems.
Currently, the review is broad and the OFT is seeking input from all industry participants.
Q Is the industry likely to be called upon for more evidence during the process? Should retailers be prepared?
A Yes. The OFT has stated that as well as reviewing written evidence, it will engage with other industry, consumer and government bodies and may also write to companies in the sector seeking further information. Retailers, especially those who submitted written comments, should therefore be prepared to be called upon by the OFT to provide further views and information.
Q When is the OFT likely to report back on its findings? Will the conclusions be enforceable, or willthey just be recommendations?
A The OFT has stated that it will issue its report in January. Whether or not this deadline is met will depend on the volume of evidence received and the level of engagement the OFT seeks with relevant stakeholders.
However, this inquiry is only a relatively informal fact-finding measure on the part of the OFT in order for it to decide whether or not the evidence suggests that further OFT action should be taken.
The sector should therefore not expect any definitive conclusions next January.
Q What are the circumstances that would lead to a full market inquiry? What are the differences between this inquiry and a full market investigation?
A The OFT will have a number of options open to it at the end of this review. It may decide to do nothing. But if it has concerns it could investigate certain companies in the sector for suspected anti-competitive behaviour and, if competition law infringements are found, this could lead to fines.
Or it could launch a wider market study. This would allow the OFT to make policy recommendations to government, or to take action under any appropriate consumer laws.
But if it considers that competition in the market is not working properly, it can request a much more detailed review of the sector by the Competition Commission.
This is known as a market investigation. This type of investigation can last up to two years and would involve significant information gathering.
If the Competition Commission decides that the market is not working competitively, the Competition Commission can use its wide-ranging powers to enforce changes in the sector, including order-making powers, the ability to accept undertakings from sector participants as well as recommending to other government bodies and regulators what further action needs to be taken.
So, if concerns are found, this is only the beginning of a much longer review. This review therefore provides the opportunity for those who have concerns to make these known to the OFT. Equally, it should also serve as a warning light for companies to prepare for a more detailed review and ensure their house is in order.