EC Energy Price-Fixing Probe

The European Commission has begun an investigation into the possible manipulation of energy price benchmarks. Several companies in the energy sector had surprise inspections carried out by the European Commission for alleged infringement of European antitrust law, namely the manipulation of the reference price for oil and bio fuel products. This investigation will most likely have very significant implications for the whole oil industry and its customers as well as the any banks, trading houses, utilities or major users who buy oil products or trade oil based commodities. The effects of the investigation will not be limited to Europe.

Decisions taken in the early stages of a cartel investigation or immediately upon discovering evidence of wrongdoing can have very significant consequences. The cost of non-compliance including financial penalties, litigation, reputational damage, and unenforceable agreements can be so great that identifying and assessing competition compliance risk factors is business critical. Please consider if you have contacts in your company or clients that might be interested in our services. We have excellent competition law and energy teams in Europe and the US that can address any issues your company or clients may have in this context.

The Commission also sent requests for information (RFIs) to major energy companies, price reporting agencies and trading houses. There is no inference that these companies are subject to the investigation. Rather the articles infer that the European Commission is using the RFIs to try to gain knowledge on how the market works, especially with regard to the Platts market-on-close (MOC) system.

When the dawn raids took place, the European Commission said in a press release that it has concerns that the companies may have colluded in reporting distorted prices to a price reporting agency to manipulate the published prices for a number of oil and biofuel products. Furthermore, the European Commission stated in its press release that it has concerns that the companies may have prevented others from participating in the price assessment process, with a view to distorting published prices. An article from Reuters alleges that the key question in the RFIs is whether there is any proof of major discrepancies between bids and offers submitted to Platts and actual deals done in the market.

The current focus of the investigation is on the period 2010-2013 but as the statute of limitations for...

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