Retail chain manager: No competition in Estonian fuel market for 10 years

  • 2022-07-20
  • BNS/TBT Staff

TALLINN - In response to economic expert Raivo Vare's recent statements claiming that the Estonian fuel market is ruled by a cartel, head of the A1000 Market retail chain Tarmo Lauring opined that it is extremely strange that fuel prices are exactly the same in all major gas station chains in Estonia and that no fuel retailer has attempted to offer better prices than their competitors for years, Postimees reports. 

Lauring noted that it is very difficult to comprehend how fuel sellers' price policies can be so similar.

"Looking at discounts made to large customers, there is definitely room for discount to the extent of at least some 20 cents, which shows that the margin regular customers are charged is very high and that competition, in fact, does not work in this field," Lauring noted.

"In other states, there are significant price differences between both chains and filling stations. In Estonia, prices are equally high everywhere and unfortunately, Latvia is essentially the only competitor to our fuel market," he added. 

Economic expert Raivo Vare recently claimed that the excise duty on fuel cannot be lowered because the Estonian fuel market is ruled by a cartel which would simply pocket the price drop. In response, the Estonian Oil Association called on the Competition Authority to check Vare's "unjustified and harsh" accusations. 

Lauring noted that the Competition Authority undoubtedly indeed checks gas station chains, however, a cartel is a deeply hidden form of crime and one that is difficult to detect.

"It would be enough if the chains had an understanding that none of the major players would compete with each other in terms of price," Lauring said, adding that looking and commerce more broadly, this situation in the fuel market is anomalous. 

Entry into the fuel market has also been made difficult for new players, according to the head of the A1000 Market chain.

"In order to prevent fraud, the state has established a very high guarantee fee, resulting in a few major players being able to divide the market and raise prices together," he said. 

"Right now, the Estonian Oil Association, which represents gas stations, is fighting for a reduction in fuel excise duty, but I completely agree with Raivo Vare that looking at the current price policy, fuel sellers will jointly pocket this money. The same happened in retail trade a few years ago when the excise duty on alcohol was lowered but prices did not actually decline in most stores," Lauring said.