Companies accused of illegal deals

  • 2001-05-24
  • Mark Taylor
VILNIUS - The Lithuanian State Competition Council has announced the findings from its seven-month investigation into high gasoline prices in Lithuania. The announcement on May 18 found six companies guilty of violating competition laws.

Mazeiku Nafta, Lukoil Baltija, Statoil Lietuva, Uotas, Pakrijas and Vaizga were all found guilty of the violation. Viazga will have to pay a fine of 29,000 litas ($7,250), Pakrijas will pay 32,000 litas, Uotas 39,000 litas, Statoil 60,000 litas, Lukoil 86,000 litas and Mazeiku Nafta will pay a 100,000 litas fine.

The investigation found that these companies came to an agreement to purchase oil from Mazeiku Nafta and limit imports into Lithuania from other companies. Arvydas Maciokas, chief of the industry division at the council, told The Baltic Times that "the companies in question created an environment where there was no possibility to import cheaper oil and thus the consumer suffered." He went on to explain that "the situation was quite strange because some companies said that there was a possibility to import and some other companies didn't."

According to Mazeiku Nafta, there was an agreement but only for a certain amount of oil. The company and others punished by the council believe that the punishment was unfair and without basis. Some companies such as Mazeiku Nafta and Uotas went as far as to refer to the whole thing as a professional performance by the council.

Prices of the most widely used grades of gasoline rose by some 0.32 litas to 0.34 litas and diesel fuel price increased by 0.11 litas per liter over the past month, reaching their historical highs in Lithuania. Shell and Statoil sold A95, the most popular grade of gasoline in Lithuania, for 2.74 litas per liter in Vilnius and other major cities. The price of gasoline A95 jumped to 2.69 litas per liter. LUKoil was selling gasoline A95 for 2.70 litas and A92 for 2.65 litas per liter, while Neste was selling A95 and A92 for 2.68 litas and 2.63 litas per liter respectively. The prices of diesel fuel in Lithuania were ranging from 1.93 litas to 1.99 litas per liter.

The competition council's decision came just one week after the Lithuanian Free Market Institute released a report on their investigation with very different results. The institute believes that the fault for high prices at the pumps falls not on oil companies or gas retailers but solely on the government's shoulders.

"Agreements between cartels and oil companies cannot be a realistic reason," said Ugnius Trumpa, vice president of the Lithuanian Free Market Institute. "Existing taxation and the government's involvement with Mazeiku Nafta have resulted in the high prices."

Trumpa went on to say that "if the Lithuanian government implements all taxes and regulations of the EU, gas prices will continue to increase and increase dramatically."

He hoped that the government would do everything possible to keep this from happening. For example, he thought that a transitory period for implementing EU regulations would be a good idea.

Though the companies involved in the investigation by the competition council could not be reached for comment, Agne Petkeviciute, chairman of Shell Lietuva, told The Baltic Times that her company believed that the solution to high gas prices was clearly explained by the Lithuanian Free Market Institute.

"The government remains the major player in this," she said. "Shell Lithuania supports the excellent efforts of the Lithuanian Free Market Institute to both inform consumers and cooperate with the government for a solution."

The decision by the competition council is expected to be challenged in court. Maciokas said that he felt that the court case would be a good learning experience for all the parties involved, including the courts.

"We need cases like this so that we can write our own case law on these issues. This is something that Lithuania doesn't really have at the moment," he said. Uotas and Mazeiku have already stated that they plan to appeal while others are expected to follow.