September 30 (SeeNews) - Lukoil Bulgaria, a subsidiary of Lukoil European Holdings, the European arm of Russian petroleum company Lukoil, has been unlawfully applying a price squeeze onto its local competitors, abusing its dominant market position, the Bulgarian competition authority said.
Lukoil Bulgaria's price policy has involved gradually changing wholesale price conditions and removing quantity discounts, which in turn could limit or distort competition in the fuel markets and impact consumers, the Commission for Protection of Competition (CPC) said in a statement on Thursday.
The ruling comes as a result of an investigation of Lukoil Bulgaria's price policy which was opened by the CPC following complaints from Bulgarian fuel and oil products retailer Insa Oil and the local subsidiary of Austrian oil, gas and petrochemical group OMV.
During the investigation, the CPC established that as part of the vertically-integrated Lukoil group, the company operates along the entire chain from fuel production to final sale and has a highly developed storage and transport infrastructure, which represents a competitive advantage over other companies in the Bulgarian fuel market.
According to the regulator, a price squeeze exists when the difference between the downstream prices of a dominant firm and the upstream prices it charges its competitors is negative or insufficient to cover the specific costs of selling the product in the downstream market.
"This behaviour by Lukoil Bulgaria represents a general strategy to limit the wholesale trade of fuels in the country, with the aim of strengthening its dominant position in the market of wholesale trade of fuels," the CPC said. This represents an abuse of dominant position in breach of both national and EU law, the regulator added.
Lukoil Bulgaria, which has over 220 local filling stations, has sixty days to argue its position in writing to the regulator.
Lukoil also owns Bulgaria's only oil refinery, Lukoil Neftochim Burgas, which imports and processes Urals crude oil, Russia's major export oil brand.
In June, Bulgaria obtained a derogation from an EU-wide ban on Russian oil imports. The exemption allows it to continue importing crude oil and petroleum products from Russia by sea until the end of 2024.
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