Meeting rejects deal to drop fuel row probe 9/4/14
A proposed deal by a dominant petrol wholesaler to open up their Western Isles depots to competitors if an official probe into their trading practices is dropped has been rejected by islanders at a public meeting.
The Competition Markets Authority (CMA) which incorporates the former Office of Fair Trading is investigating complaints that Scottish Fuels is abusing its dominant position and pushing up petrol prices in the Western Isles.
Scottish Fuels which is owned by Certas Energy has contracts with filling stations requiring them to buy fuel exclusively from them for five years.
Cheaper wholesale prices through rebates are only available to retailers if they agree not to use any rival supplier.
Scottish Fuels has now offered legally binding commitments in a proposed deal to end the probe.
It offers to let any potential competitor draw fuel out of the coastal depot at Loch Carnan, in South Uist, for five years. The terminal is owned by the Ministry of Defence and leased to Scottish Fuels.
In addition, it would extend access to its Stornoway depot to rivals only up to the end of 2017.
The CMA accept these proposals don’t directly affect the price of fuel but could kickstart competition in the market by allowing the entry of rival wholesalers.
However, the consensus of a public consultation meeting organised by CMA on Tuesday night rejected the time limits to the commitments as being far to short.
It was suggested it would take up to ten years before any rival could develop business up to a stage to invest and build their own storage tanks.
Ian Macleod of Tong stressed: “In two or three years time we will be back to square one.“
Lewis petrol station owner Gordon Maclennan said the proposals were not “realistic”
He stated: “It would take longer than three years for a competitor to set up a rival depot.”
He added: I find it quite alarming we are going to be back to where we were in 2017.”
He continued: “I wouldn’t call them commitments because in two and a half years the prices will shoot up again. It is not acceptable.”
James McBeth, project director with the CMA, encouraged all islanders to write in with their views before the end of the consultation next Thursday.