CPC sanctions Lukoil-Bulgaria EOOD with BGN 67,771,454 for abuse of dominant position

The Commission for the Protection of Competition (CPC) imposed a pecuniary sanction in the amount of 67,771,454 BGN for abuse of a dominant position by applying price pressure to the company's competitors in the wholesale trade of motor fuels on the territory of the country, the regulator said in a statement. According to the CPC, this may prevent, limit or distort competition in the fuel markets and affect the interests of consumers.

The investigation began at the request of "OMV Bulgaria" Ltd. in connection with serious concerns about the violation of competition on the fuel markets in the country by "Lukoil Bulgaria" Ltd. Subsequently, a request from "Insa Oil" EOOD and signals from wholesale market participants were added to it.

In this regard, the CPC collected a huge volume of information from "Lukoil-Bulgaria" EOOD, "Lukoil Neftohim Burgas" AD, "Customs" Agency and almost all large traders and owners of fuel warehouses, the announcement states.

Thanks to the timely intervention of the CPC, the targeted strategy of "Lukoil-Bulgaria" EOOD to gradually capture the wholesale fuel market was prevented. More specifically, the company is trying to create the impression that the new price policy imposed by it in 2021 on merchants will lead to lower prices for the end user. Since such behavior is well known to the antimonopoly authorities of the EU, the CPC considers that, in practice, the only interest of the dominant enterprise, which undoubtedly is "Lukoil-Bulgaria" EOOD, is to eliminate its competitors and, in the long term, impose unilaterally -high consumer prices. In this regard, it should be noted that it is the wholesalers and tax warehouse keepers who could oppose the dominant undertaking by exerting some competitive pressure, insofar as they are able to import or supply fuels from alternative refineries, stated by the regulator.

From the analysis of the huge volume of collected and analyzed data, the CPC draws attention to some of the main facts:

"Lukoil-Bulgaria" EOOD owns more than half of the market and is the leader in the wholesale trade of motor fuels. It is part of the Lukoil group, which has unique for the country logistics, storage and transport infrastructure with a strategic geographical location and operates along the entire chain from the production of fuels to their sale to end users.

The commission found that "Lukoil-Bulgaria" EOOD implemented a comprehensive strategy to limit competition in the wholesale trade of fuels in the country. Through changes in its pricing policy within 2021, the company has completely canceled the quantitative discounts provided by it for wholesale trade in motor fuels under the regime of deferred payment of excise duty, while traders purchasing fuels with paid excise duty from bases of "Lukoil- Bulgaria" EOOD, received an additional discount. A unilateral price policy was applied in the respective markets, which leads to the presence of the so-called "price press". This violation is also proven by the conducted tests, according to European economic theory and practice. As a result of the price press, the competitors of the dominant enterprise, which alone can influence the price policy of Lukoil-Bulgaria EOOD, could not effectively oppose themselves in terms of price, and this leads to an outflow of customers, financial losses and departure on the market. Apart from eliminating competition, such behavior also reduces the incentives for potential new traders and investors to enter and grow in the fuel markets, ultimately harming end users. Given the interconnectedness of the wholesale and retail markets for automotive fuels, the increase in wholesale fuel prices, due to weakened competitive pressure, as a result of the behavior of Lukoil-Bulgaria EOOD, will have an immediate effect on the prices of automotive fuels offered by gas stations, which, as is known, has a huge socio-economic significance.

As a result of the active actions of the CPC, during the investigation of the proceedings, "Lukoil-Bulgaria" EOOD changed and corrected its behavior, which is the most important goal of the antimonopoly body, namely to provide protection and conditions for the expansion of competition.

The decision of the Commission can be appealed to the Administrative Court - Sofia region by the parties and by any third party that has a legal interest, within 14 days, it is specified in the announcement.