Petrol prices: OFT dropped fuel probe too early, says MEP

By David Lewis
File on 4

image source, PA
image captionHow much you pay for petrol can vary from street to street and town to town

A European MP who pushed for regulators in Brussels to investigate alleged price-fixing by oil companies has criticised the UK's Office of Fair Trading's probe into the affair.

Arlene McCarthy, vice chair of the European Commission's monetary and economic affairs committee, said the OFT "walked away" after four months.

The OFT rejected concerns too readily, and let down consumers, she said.

But the OFT said that it received no "credible evidence" prices were rigged.

Earlier this year, the European Commission carried out raids on the offices of several oil giants, amid concerns that "the companies may have colluded in reporting distorted prices".

Last year, after mounting public concern about petrol price rises, the OFT made an appeal for information about possible market manipulation.

"The OFT looked at it for four months and dropped it," said Ms McCarthy, Labour MEP for the North West of England.

She is currently leading the re-drafting of Europe's market abuse laws. She said the OFT did not dig deep enough, telling the BBC that it was extraordinarily difficult to find evidence for price-fixing.

She said: "If you look at Libor, they had to trail through some 2,000 emails to discover what was going on between traders in the market, so you have to take the time to do it properly.

"It will take you longer than four months to really discover the nature of these trades."

"I think the OFT walked away from investigating an issue that's fundamental to consumers," she added.

Normal market

The OFT published its report into the road fuels market in the UK in January, saying that it was working "relatively effectively".

The group representing independent fuel stations says it contacted the OFT earlier this year about suspicious price fluctuations in the wholesale markets.

"What worries us is that from Christmas last year until the third week in February, approximately eight weeks, the wholesale cost of petrol for UK retailers rose by 10p a litre", said Brian Madderson, chairman of the Petrol Retailers' Association.

"This was at a time when demand for petrol had fallen anything between 10% and 20% on a weekly basis because of the extreme wintry weather. On top of that, the refineries in the UK were complaining that they were producing a glut of petrol," he added.

"In any normal market, the price would have collapsed. And here we saw the price increase by 10p per litre."

Mr Madderson took his concern to the OFT - but was told he needed further evidence.

The OFT would not be drawn on the specific criticisms levied against it - other than to say it stood by its report published in January.

"The OFT takes price-fixing very seriously. The scope of that offence is narrowly defined, however, and will not extend to all forms of price manipulation or market abuse," a spokesman said.

Listen to the full report on File on 4 on BBC Radio 4 on Tuesday, 25 June at 20:00 BST and Sunday, 30 June at 17:00 BST. Listen again via the Radio 4 website or the File on 4 download.

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