OFT launches Western Isles fuel consultation
- 18 March 2014
- From the section Highlands & Islands
The Office of Fair Trading (OFT) is planning measures that would break the dominance of Certas Energy in supplying fuel to the Western Isles.
Following an inquiry into possible breaking of competition law, the regulator is consulting on proposals to end locked-in contracts between retailers on the islands and the firm.
Locals will be asked for their views on the arrangements.
Rival fuel suppliers said the current deal gives Certas an unfair "monopoly".
Certas has put forward a number of proposed commitments to address the OFT's competition concerns.
The company said the OFT had started the public consultation "without a finding of infringement of competition law".
The proposed measures would bring to an end contracts which require many filling stations on the islands to buy fuels exclusively from Certas for five years.
They would also require that Certas grant other fuel suppliers access to its marine terminal in South Uist for five years.
Ann Pope, senior director in the OFT's services, infrastructure and public markets group, said: "These proposed commitments offer a real opportunity for alternative fuel suppliers to enter the market which should ultimately help make fuel prices more competitive to the benefit of people and businesses in the islands.
"The commitments address the OFT's competition concerns and at the same time send a clear message that suppliers need to comply with competition law even in smaller local markets.
"We would now like to hear the views of the community and all other interested parties before we make a decision on whether to accept the commitments."
A Certas spokesman said: "Certas Energy has worked closely with the OFT to agree certain measures that reflect specific features of the Western Isles and welcomes further competition in the Western Isles.
"Current Western Isles contractual arrangements are similar to those Certas Energy has in the rest of the UK, and are commonplace in the industry.
"However, these new measures will ensure that every Western Isles retailer currently supplied by Certas Energy will be given a range of contractual options to engage with the company in the future."
He added: "We will be working with all parties to ensure the finalised proposals are implemented to this effect."
The OFT's consultation has been welcomed by Comhairle nan Eilean Siar.
Cllr Kenneth Murray, chairman of environment and protective services, said: "I welcome the fact that the OFT has identified competition concerns regarding the supply of fuel in the Outer Hebrides.
"I also welcome the fact that the OFT has secured commitments that will increase competition and remove barriers to market entry. It is essential, however, that these commitments result in lower prices at the pumps for consumers across the islands."
He added: "I look forward to meeting with OFT officials in early April and exploring the detail of the proposed commitments. The Comhairle will fully participate in the consultation with the continued goal of bringing benefits to consumers and businesses in the Outer Hebrides."