2024-08-03 11:17:41
Refineries are “photographed” as the main culprits of high prices in liquid fuels in our country the Competition Commission (EPANT).
In the ex officio investigation of the Competition Commission it is stated that duopoly conditions prevail in the refining stage, with a high degree of concentration.
In fact, the analysis of the refining prices revealed an identification (with marginal differences in the prices between the two companies in the fourth and fifth decimal places) and a parallel evolution of the prices.
THE Competition Commission notes that although the two companies carry out a significant part of their sales in foreign countries, in general, for liquid fuel products, a higher revenue per unit from domestic sales is obtained for each company, in relation to the corresponding average revenue of their exports .
That is, they sell fuel more expensively in Greece than in the exporting countries.
According to the Commission, the installed production capacity, which exceeds the needs of the domestic market, combined with the shrinking of the sector (worldwide), over time act as barriers to the entry of other companies into the sector.
At the same time, there is also a series of barriers to entry, such as the highly required and non-recoverable cost funds for the creation of the necessary production facilities, the unpredictable profit margins characterized by very high volatility, the future prospects of further limiting the market in question to an international level, as well as domestic institutional factors, such as the foreseen time-consuming and demanding licensing procedures and the obligation to maintain safety stocks.
Along the same lines, he points out that imports do not appear to be exerting significant competitive pressure on refiners. At first glance it appears that the need to hold safety stocks may pose barriers to imports for independent traders.
Companies meet their needs through (plus) storage and service contracts, which could reduce the intensity of competition between them or create bottlenecks, especially in island regions. Imports could provide trading companies with alternative sources of supply, putting competitive pressure on refiners.
Wholesale trade
As far as the wholesale stage is concerned, according to the Commission the market is characterized by a moderate to low degree of concentration, where active companies seek to strengthen their competitiveness through the promotion of alternative differentiated products, the provision of services, as well as the types of exploitation of the brand they market.
The customers (retail stations) do not make direct purchases from the refineries nor do they import, therefore they have no alternative sources of supply. Therefore, the bargaining power belongs to the wholesale companies, which in turn are limited by the lack of alternative sources of supply at the refining stage.
Barriers to entry include the high degree of verticalization combined with economies of scale and spectrum, the shrinking size of the Greek market, high levels of delinquency, difficulties in importing petroleum products from trading companies due to the safety stock system, and restrictions associated with the licensing of storage facilities.
Inability to exert pressure
According to the Competition Commission, the difficulty of finding an alternative source of supply through imports results in the inability of trading companies to exert pressure on refiners and therefore the ability of the latter to sell their products at increased prices, which constitutes a structural barrier to entry or expansion of competitors of refining companies or even exerting pressure on behalf of these customers.
Therefore, the impossibility of imports combined with the restrictions on the licensing of storage areas, but also the increased cost of keeping stocks are factors that limit competition.