Fuelling competition 30/3/14
Sirs,
Last week, the Office of Fair Trading announced that we had received proposals from the main supplier of road fuels to the Western Isles. We are now consulting on whether to accept these commitments and wanted to outline the reasons why we think they could greatly benefit island businesses and consumers alike.
As you may be aware, last year we opened an investigation into whether Certas (which owns Scottish Fuels) had abused a dominant position in the supply of petrol and diesel in the Western Isles. In particular, Certas had signed contracts with a number of filling stations on the islands which required them to buy fuel exclusively from Certas for a period of five years.
We were concerned that these actions may have been restricting competition by limiting the entry or expansion of rival road fuels wholesalers. And we know from the many letters and phone calls we received, that this situation was of general concern for islanders and beyond.
Our investigation into the issue has led us to delve deeply into the current arrangements
for fuel supply on the Western Isles. This sort of scrutiny -
The company has also gone a step further and agreed to open up access to its marine terminal at Loch Carnan to rival wholesalers for a period of five years. Certas will also extend access to its terminal in Stornoway, currently available to other wholesalers until 2015, by a further two and a half years.
Of course, we recognise that these proposals don’t directly affect the price of fuel, which we know is one of the most important issues for residents and businesses on the islands. Such a direct intervention is beyond our statutory powers. However, we believe that these measures will fuel competition in the market by allowing the entry and growth of rivals to Certas.
This looks like a real step forward in providing an opportunity for island fuel costs to become more competitive over time.
If the proposals go ahead, we will put in place very clear controls to ensure that Certas sticks to its promises. Certas, and its parent company DCC Plc, will be required to report to the OFT’s successor, the Competition and Markets Authority (CMA), every year to show that they are fully complying with their commitments. The CMA will also wish to hear from businesses and individuals if they believe the commitments are not being adhered to.
We are keen to listen to the thoughts of everyone affected before deciding whether to accept Certas’ proposed commitments, which can be found on our website at www.oft.gov.uk.The consultation will be open until 17 April 2014, and you can email us at WIFCConsultation@oft.gsi.gov.uk, We will also be holding an open consultation session at 6pm on Tuesday 8 April at 6pm in the Council Chambers on Sandwick Road, Stornoway.
We look forward to hearing from you.
James MacBeth,
Project Director
Office of Fair Trading