In March 2012, Bloomberg reported that a commission appointed by the G20 nations’ finance ministers called for stricter regulation of price-reporting agencies (now confusingly referred to as PRA by the media) to prevent the manipulation of oil markets. At that time, a consultation document published by the International Organisation of Securities Commissions (IOSCO) said: "There is a risk that a price-reporting agencies benchmark price can be manipulated by the submission of false prices or by over- or under-stating volumes transacted."
The real PRA had submitted a formal complaint to the Office of Fair Trading (OFT)in February 2012 alleging anti-competitive pricing across the UK, based on evidence gathered from its members.
The IOSCO report completed during last summer was effectively buried, with the upshot being interviews with global oil companies and PRAs who all strenuously confirmed that the present system "was as good as it is going to get". No further action, despite grandstanding from our political leaders over the issue.
Then last September, having tried to kill off the PRA complaint for lack of evidence last May, the OFT reluctantly yielded to lobbying pressure and offered a six-week window in a "call for information". With hindsight this now appears to have been nothing more than a political sop as the call was voluntary only. Many large corporates declined to even meet the OFT, let alone submit evidence,
So, finally the OFT reported in January and it was no surprise to read its conclusion that the "UK market for retail road fuels was working well for consumers". It was stated that they had no new compelling evidence to support the need for a full market study under the terms of the Enterprise Act 2002 that the real PRA had requested. This failure to act was bitterly condemned all round.
In a move that must leave the OFT feeling vulnerable to further criticism, the EC’s DG Competition launched a serious investigation by raiding the offices of three global oil companies and a price-reporting agency citing concerns about possible price fixing. I am a great believer in the old adage "there’s no smoke without fire" but, based on recent outcomes, there can be no second guessing the outcome of this EC-led investigation.