Germany’s oil and fuels market faces risks to competition due to the pricing mechanisms, the antirust watchdog, Bundeskartellamt, said in a report on Wednesday.

Competition in the oil market of Europe’s biggest economy could be at risk, due to the current oil and fuel price assessments, Bundeskartellamt, or the Federal Cartel Office, said in its final report on the sector inquiry that was launched in 2022 amid the spiking fuel prices in the wake of the Russian invasion of Ukraine.

The final report focused on supply streams, contractual terms, and pricing structures involved in fuel trading in Germany. For this purpose, the Cartel Office had asked not only tank farm operators, wholesalers, and gas stations to provide information, but also price assessment providers.

“The inquiry has once again shown that the conditions for effective competition in the German mineral oil sector are difficult,” Andreas Mundt, president of the competition authority, said in a statement.

“While we do not consider price assessments to be categorically anti-competitive, we have found that the way they are currently compiled poses considerable risks to competition,” Mundt added.

The Cartel Office flagged competition concerns raised by the price assessment systems in Germany.

“In light of the inquiry’s findings it is doubtful whether the methodologies used to calculate price assessments and their practical application ensure sufficient protection against anti-competitive risks,” the final report says.

The watchdog flagged an increased risk of collusion and risks of manipulation.

“In their current form, the price assessment systems make the pricing behaviour of individual competitors even more transparent and thus facilitate at least tacit collusive behaviour in spot market sales,” the Cartel Office said.

Moreover, the market is at risk of manipulation as the current way in which the price assessment systems are designed carry a risk that individual market players may manipulate price assessments to their advantage, for example by selectively reporting data, the competition authority said.  

By Charles Kennedy for Oilprice.com

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