Big win for consumers
Competition Bureau hits a home run

Media release

Conception Bay South, NL, June 13, 2008 – Some oil companies are going to have to “work harder” to gain back the consumers trust after the federal Competition Bureau pressed charges of price fixing and collusion against several Quebec companies yesterday.

Three companies have already pleaded no contest and face up to two million dollars in fines for their folly and one of those companies also has operations here in Newfoundland and Labrador. Ultramar Limited was fined close to 1.9 million in their role in the scheme.
The Bureau is also alleging that other retailers operating under the Shell, Esso, Irving Oil and Petro-Canada picked up the phone and called each other to agree on what price to set.

“Consumers in this country have believed that companies charged the same price because they were afraid of giving any market advantage to the other guy. Now the Bureau has found out that this is not the case. In reality, what they found out was that, at least some of the companies literally made a fortune in spite of ensuring we were ‘getting good value’ for our dollar. Now they have to go to work and try to gain the trust back from us,” said George Murphy, group researcher for the Consumer Group for Fair Gas Prices.

“It’s just another reason why we have gas regulation in this province. There’s a lack of trust among oil companies and the lack of competition before regulation was quick to point that out. Fact is, is that oil companies here and elsewhere purchase gasoline and other oil products on different days and the price is different between those companies for that very reason, yet the price didn’t change between companies here. It begs to question if companies here may also be under the scrutiny of the Competition Bureau. Before regulation came in, there was no control to prevent such a thing from happening here. It would not surprise me in the least to learn that the Bureau had companies here under investigation because they failed to drop the price when the markets showed a drop in pricing. It has to be asked of the oil companies here, knowing that there is no regulation of the minimum to be charged here, why they don’t compete on that basis for market share.

“The Competition Act and the Bureau both need to get a little more work. Laws preventing the sharing of supply have to be revisited and such things as ‘reciprocal sales agreements’ and market rationalization of the oil refining industry need to be examined. Companies should never be allowed to share from the one source of supply that happens in some areas of the country, particularly in less populated areas. It is, I believe that simple ‘reciprocal sales’ arrangement that has ‘tempted’ oil companies to charge the same price in the first place. If Ultramar wants to sell here, they should be shipping in their own product from the Montreal refinery instead of buying stock off their competition like Irving or North Atlantic.

“Lead us not into temptation.

“The Competition Bureau and Liberal M.P Dan McTeague both need to be congratulated today for the hard work both parties have put in over the face of this investigation and for the changes in the Competition Act that are being lobbied hard for. What is missing here is restitution back for consumers and a means of levying heavier fines in the wake of the money that these companies garnered at the consumer expense. It’s going to be a long road back for some of these companies to earn consumer trust. These charges show that consumers didn't get value for their money.”

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For more information, contact;

George Murphy
Group researcher/Member
Consumer Group for Fair Gas Prices