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Victoria Mindova

Greece’s fuel market is divided between the two largest domestic refineries Motor Oil Hellas Corinth Refineries and Hellenic Petroleum, which according to a publication in Wall Street Journal are engaged in manipulative and anticompetitive practices. The edition refers to a report of the International Monetary Fund, which states that the non-competitive market is the reason for the high price of fuel to end users in Greece.

GRReporter contacted the Hellenic Competition Commission. It confirmed that it had found in 2008 a pricing agreement related to airport fuel prices between the refineries Motor Oil Hellas Corinth Refineries and Hellenic Petroleum. It contradicted the principles and laws of the free market and the companies were fined  2.5 million and 7 million euro respectively. A similar under-the-counter deal was found in the retail between the firms British Petroleum and Shell. The two powerful petrol stations had agreed on the value of retail prices, thus forming a cartel. The fine was a total of around 70 million euro – a penalty fee of 50 million euro for British Petroleum and 20 million euro for Shell.

Motor Oil Hellas is owned by the Greek oil tycoon Vardis Vardinoyannis, and Hellenic Petroleum is partly owned by the state (35.5%) and the billionaire of Greek origin Spiros Latsis holds the remaining 41.9%.

"The Greek fuel market is highly concentrated and basically controlled by the two domestic refiners," the report states quoted by the newspaper. The supervisors conclude that the vacuum created in the market is costing consumers 1 billion euro a year. The report states that a lower price of fuel imports and processing could reduce the inflation in the country by more than 1%. In addition, it notes that the revenue from fuel trading in Greece is among the highest compared with that in other European countries.

The biggest problem in Greece seems to be the regulatory framework that favours the current status quo, experts note. One of the restrictions which is seriously reducing the chances of new players entering the market is that importers should have warehouses to store the fuels for 60 days, which is beyond the financial capabilities of smaller firms. Furthermore, fuel can only be transported in large tankers, but petrol stations are not allowed to own and use vehicles of that size.

"This makes it impossible for independent gas stations to transport fuel into Greece," the report says. Thus, the whole market depends on the supplies of the two major domestic refineries.

The country’s response to the publication of the report was quite weak. In a telephone conversation, the representative of the Hellenic Competition Commission told GRReporter, "The dominant position of Hellenic Petroleum in the fuel market does not yet mean that there is a cartel" and added, "We are aware of the majority of the issues referred to in this publication and we have been studying them for years. We intend to check these data but nothing could be said about a cartel for the time being."

The same source stressed that the problems the legislation has been creating in relation to the "opening" of the fuel market in Greece are not new. He said the reform requires funding, which the state is unable to currently allocate. Such is the case with the construction of state-controlled facilities for storing fuel reserves. Greece has been in a recession for five years now. An improved project would help but, as you know, now there is no money for it, the expert says. As for the tackling of unfair competition, the Commission’s representative stated, "We have tools to determine if there are violations."

Some of the proposals of the Commission for greater transparency in the fuel sector have been adopted since 2008, but they do not seem to solve the problem with the lack of easier access to the market.

The installation of cash registers in petrol stations as well as of input-output devices to render an account of fuel retailing are only part of the measures proposed to improve the market functioning. However, the problem remains when it comes to the monitoring for violations in the last part of the chain, retailers in the sector say. Refineries and warehouses remain outside the scope of controlling services, small merchants complain.

"The Commission has been monitoring many of the issues in the report for years," the representative of the Competition Commission repeated. He explained that Hellenic Petroleum holds 70% of the Greek fuel market and Motor Oil Hellas Corinth Refineries holds 25% of it. By the end of the year, a second report on the state of the fuel market of Greece will be released, which aims to provide a clearer picture of whether changes have occurred in the specific sector and what they are. "Our role is to check whether the principles of competition have been observed. We are an independent body and we cannot take specific actions. We can only make an assessment on the base of the findings," the representative of the Commission stated. Corrective actions remain an initiative only of the state and the responsible institutions.