Supply of oil fuels in an emergency: memorandum of understanding
| Case Outcome | CA98 - no grounds for action |
| Decision Date | 31 October 2001 |
| Date | 31 October 2001 |
| Case Number | CA98/8/2001 |
| Subject Matter | CA98 and civil cartels |
| Court | Competition and Markets Authority (EW) |
Office of Fair Trading 1
Competition Act 1998
Decision of the Director General of Fair Trading
No. CA98/8/2001*
Memorandum of Understanding on the supply of oil fuels in an
emergency
25 October 2001
(Case CP/1730-00/S)
SUMMARY
The Director General of Fair Trading has concluded that a Memorandum of
Understanding, which was drawn up by the Government following the September 2000
fuel crisis, has the object and effect of preventing, restricting or distorting competition
within the United Kingdom but that it merits an individual exemption from the Chapter I
prohibition, subject to certain conditions and obligations. The Director has also
concluded that since there is no evidence that any of the actions under the MoU have
resulted in an abuse, the Chapter II prohibition has not been infringed.
The MoU was signed by the Government, major oil companies, oil independents, road
hauliers, the police and trade unions following the September 2000 fuel crisis in order
to preserve the supply of oil fuels and, in the event of unavoidable supply disruption, to
protect supplies to essential users. It was notified by the major oil companies.
The Director has concluded that an individual exemption from the Chapter I prohibition
is merited because: the MoU improves the distribution of oil fuels during an oil fuel
emergency; consumers in the form of essential users would benefit directly and
consumers in general would benefit from the priority given to these users, who for
example, provide emergency services, maintain public safety or supply food; the
* Certain information has been excluded from this document in order to comply with the provisions of section
56 of the Competition Act 1998 (confidentiality and disclosure of information). Excisions are denoted by
[...].
Office of Fair Trading 2
restrictions upon competition arising from the MoU are no more than necessary; and, as
the MoU does not affect competition for a substantial amount of oil fuel that is surplus
to the Government’s allocation requirements, the MoU does not eliminate competition in
respect of a substantial part of the products in question.
The public were consulted about the Director’s proposal to issue an individual
exemption. A notice was issued on 12 July 2001. No substantive responses to the
public consultation were received.
I THE FACTS
A Background
1 On 7 November 2000 the Memorandum of Understanding (MoU) was notified by
BP Oil UK Limited, Conoco Limited, Esso Petroleum Company Limited, Shell U.K.
Limited, Texaco Limited, TotalFina Oil GB Limited and Elf Oil UK Limited (the
Applicants) to the Director General of Fair Trading (the Director) for a decision
under sections 14 and 22 of the Competition Act 1998 (the Act). The
Applicants requested a decision that the MoU does not infringe the prohibition
imposed by section 2 of the Act (the Chapter I prohibition) or that in the
alternative, the Director grant an individual exemption under section 4 of the Act
and also requested a decision that the MoU does not infringe the prohibition
imposed by section 18 of the Act (the Chapter II prohibition). In reaching this
decision the Director has taken into account agreements, concerted practices
and conduct which have arisen out of the implementation of the MoU and about
which he has been informed. He has not considered agreements, concerted
practices or conduct which occurred during the September 2000 fuel crisis and
before the MoU had been signed.
2 A summary of the notification was placed on the public register of the Office of
Fair Trading (the Office) on 6 December 2000. It was also published in the
Office’s Weekly Gazette.1 An invitation to comment was placed in Forecourt
Trader magazine requesting third parties’ views on the MoU.2 Letters inviting
comment were also sent to certain third parties identified as having an interest in
the MoU.
1 Issue 01/2001, 30 December 2000 – 05 January 2001.
2 'Forecourt Trader', William Reed Publishing Ltd, Issue January 2001, p 36.
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