RIGA - Suspicions of price-fixing in Latvia's fuel market could finally be investigated after Finance Minister Oskars Spurdzins asked the Competition Council to look into whether gas traders had colluded to set the price at the pump.
The minister said that Latvia's fuel prices did not correlate with those on the world market, since prices here fail to fall in tandem with those internationally.
"I would like the Competition Council to assess this situation. Maybe there is nothing suspicious, but it is worth investigating," he said.
Spurdzins stressed that the price-hikes have had considerable impact on inflation, as all goods and services linked with fuel consumption become more expensive. Latvia had the highest level of inflation among all EU member states last year.
The minister said he trusted the council's conclusions made last year when similar price-fixing suspicions arose.
"Life goes on, and we must follow this process closely. The situation in January may be quite different from the situation in October and November," he said.
Fuel traders denied any impropriety. Lukoil Baltijas President Haim Kogan said he saw no basis behind the minister's suspicions and that he was unconcerned about the council's investigation.
"It's not price fixing 's we simply have cheaper taxes," he said. "We get our gasoline from Lithuania, because that's the only place that we can afford. The rest of Europe is too expensive."
The price of gas this month has remained at approximately 0.48 lat (0.69 euro) per liter. In comparison to Western Europe, this is especially low, Kogan said. In Germany gas costs 1.19 euro per liter, and in Holland 1.26 euro.
Peteris Vilks, head of the Competition Council, said that the organization was closely following fuel market changes as well as other markets. He noted that last year's price increase was driven not only by local circumstances, but also the excise tax increase and soaring international prices.
Vilks added that consumer choices were often determined by "irrational circumstances," and that there was a popular myth that fuel sold by better-known brands meant better quality.
Fuel prices rose steeply in 2004, driven not only by tax growth from May 1 in accordance with EU requirements, but also by the record-high level of global fuel prices.
Parliament's budget and tax committee expressed suspicion last year that Neste and Statoil gas stations had agreed on the illegal practice. The Competition Council, however, did not find any cartel agreements among Riga gas traders.
