The OFT has launched a consultation on proposals to improve competition in the supply of petrol and diesel to filling stations in the Western Isles of Scotland.
The OFT has been investigating a possible infringement of competition law in the islands, in particular the contractual arrangements for the wholesale supply of road fuels between Certas Energy UK and certain filling stations on the islands.
The OFT’s consultation is on commitments proposed by Certas which are designed to address the OFT’s competition concerns.
The proposed commitments will bring an end to contracts which require many filling stations on the islands to buy fuels exclusively from Certas for five years. The commitments will also open up access to Certas’s marine terminal in Loch Carnan, in South Uist, to potential competitors to Certas for a period of five years. At the same time, the commitments will extend access to Certas’s marine terminal in Stornoway, in the Isle of Lewis, to potential competitors to Certas until the end of 2017.
Ann Pope, senior director in the OFT’s Services, Infrastructure and Public Markets group, said: “These proposed commitments offer a real opportunity for alternative fuel suppliers to enter the market which should ultimately help make fuel prices more competitive to the benefit of people and businesses in the islands. The commitments address the OFT’s competition concerns and at the same time send a clear message that suppliers need to comply with competition law even in smaller local markets.
“We would now like to hear the views of the community and all other interested parties before we make a decision on whether to accept the commitments.”
Anyone wishing to comment on the commitments should submit their views to the OFT by 17 April.
In a statement Certas responded: “Certas Energy acknowledges today’s announcement from the OFT regarding its investigation into the contractual arrangements for the wholesale supply of road fuels to petrol stations in the Western Isles. The OFT has today commenced a public consultation on a series of measures designed to address the aspects of the Western Isles’ supply arrangements that have been the focus of the OFT’s investigation and to provide retailers with greater choice. The OFT has commenced the public consultation without a finding of infringement of competition law.
“Certas Energy has worked closely with the OFT to agree certain measures that reflect specific features of the Western Isles and welcomes further competition in the Western Isles. Current Western Isles contractual arrangements are similar to those Certas has in the rest of the UK, and are commonplace in the industry. However, these new measures will ensure that every Western Isles retailer currently supplied by Certas Energy will be given a range of contractual options to engage with the company in the future. We will be working with all parties to ensure the finalised proposals are implemented to this effect.”
Alongside the Western Isles investigation, the OFT has also carried out a preliminary investigation of specific aspects of Certas’s conduct in the Shetland Islands. Having assessed the evidence it said it was considered that the likelihood of a successful case outcome resulting from further investigation of Certas’s conduct did not justify the expenditure of resources that such further investigation would require. Therefore it has decided to close that aspect of its investigation for reasons of administrative priority. It added that if any new evidence was provided then the decision would be reviewed.