European Authorities Raid Oil Firms in Price Fixing Probe
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The European Commission on Tuesday raided the offices of a number of oil companies to investigate claims that oil giants may have “colluded in reporting distorted prices to a price reporting agency to manipulate the published prices for a number of oil and biofuel products”.
The European Commission on Tuesday raided the offices of a number of oil companies to investigate claims that oil giants may have “colluded in reporting distorted prices to a price reporting agency to manipulate the published prices for a number of oil and biofuel products”.
On Wednesday, British energy giant BP, Royal Dutch Shell and Norway’s Statoil confirmed their offices had been raided by European antitrust officials over suspected oil price manipulation. Oil pricing agency Platts also confirmed that its London office was visited by antitrust officials.
Italian oil firm Eni said the European Commission had asked it to provide information, although it was not being probed.
EU antitrust officials can make unannounced inspections of a company’s offices as a preliminary step in an investigation. Such probes do not mean the companies are guilty of any wrong-doing, the Commission said.
In a statement, the Commission said it had concerns that oil companies “may have colluded in reporting distorted prices.”
“Even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and biofuels purchases and sales, potentially harming final consumers,” it said.
As part of the investigation, the Commission said it was examining whether the companies may have prevented others from participating in the pricing process “with a view to distorting published prices”.
“Any such behaviour, if established, may amount to violations of European antitrust rules that prohibit cartels and restrictive business practices and abuses of a dominant market position.”
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The surprise probe underscores how pricing in some energy markets lacks the transparency of financial products such as stocks and U.S. corporate bonds, and was one of the biggest cross-border actions since the Libor rigging scandal.
Assessments made by price reporting companies such as Platts are used to determine the market cost of several energy products in Europe and globally and has the potential to inflate consumer prices for everything from gas to airline ticket prices.
Total SA, Europe’s third-biggest oil company, estimates as much as 80 percent of all crude and oil product deals are linked to reference prices including those published by Platts, while as much as 20 percent use trades on the New York Mercantile Exchange or ICE Futures Europe.
Critics say the pricing system provides only a snapshot of the market and excludes most deals, making it vulnerable to manipulations.
