“From the data available to the BWB, these gross margin increases can hardly be fully explained by the increased costs,” said the current BWB interim boss Natalie Harsdorf-Borsch on Thursday in the Ö1 “Mittagsjournal” of the ORF. “The authority cannot currently completely rule out cartels and abuse of market power. We did not obtain any court-proof evidence from the data that we collected for the investigation,” said Harsdorf-Borsch.
“The extent to which profits have also increased depends on the development of costs, which also appear to have increased, but not to the same extent,” says the BWB report. “It’s up to the oil majors to prove that if the trend observed in gross refining margins doesn’t translate into corporate earnings.”
Economics Minister Martin Kocher (ÖVP) sees further need for clarification. “The Federal Ministry now expects clarification from the industry participants about possible cost factors. From the point of view of the Federal Ministry, the increases in gross margins must be explained,” said Kocher when asked by APA. However, the business term “gross margin” should not be confused with profits.
Vice Chancellor Werner Kogler (Greens) identified a need for explanation. Consumers have a right to fair and transparent prices. “Companies are responsible for this, especially in times of high inflation. The oil companies now have to explain themselves,” said the politician in a broadcast.
The BWB examined the domestic fuel market in the period from January to mid-June. Since the start of the Ukraine war on February 24, petrol and diesel prices have risen sharply. According to the competition watchdog, 50 percent of the fuel price increase is due to the rise in crude oil prices and 50 percent to the increased gross refining margins.
The calculations of the BWB show that in the first half of June compared to the time before the start of the Ukraine war, the fuel prices, which had risen by around 36 cents per liter of diesel and 41 cents per petrol, have “decoupled” themselves from crude oil prices because crude oil prices have only risen by a little more than increased by around 22 cents per liter. According to the competition watchdog, the “inexplicable stronger increase in prices (decoupling)” at the filling stations for diesel and gasoline from the rise in crude oil prices has led to a tripling of the gross refining margins over this period.
Petroleum refineries process crude oil into gasoline, diesel and kerosene. According to the BWB, the gross refining margins of the refineries of OMV, ENI, Shell, BP and JET soared by an average of around 14 cents per liter for diesel and around 20 cents per liter for gasoline in the period under review. The gross refining margin is the basis of the refinery profits, but “other moderately increased costs have to be subtracted,” according to the Federal Competition Authority. According to the BWB, the calculated gross margins are industry-standard indicators to show the change in profitability at refineries.
In view of the sharp rise in petrol and diesel prices and due to submissions and complaints about the mineral oil industry, the BWB launched an industry investigation on March 21st. Vice-Chancellor Werner Kogler (Greens) and the SPÖ and FPÖ had previously criticized the price policy of the mineral oil companies. In March, Kogler pointed out a possible market failure in a statement of facts to the competition authority.
The cartel watchdogs sent requests for information to OMV, ENI, Shell, BP and JET for the industry investigation because they operate gas stations in Austria and hold shares in refineries. In addition, BWB held discussions with three major fuel traders and major service station operators not involved in refining. The Federal Cartel Prosecutor and E‑Control were also involved in the industry investigation.
In response to the BWB industry investigation, the Chamber of Labor (AK) on Thursday called for the initiation of a price review procedure in accordance with the Price Act. “The mineral oil companies make massive excess profits,” criticized AK President Renate Anderl in a broadcast. “The excess profits must be skimmed off by the federal government and returned to consumers,” said Anderl. The ÖAMTC also criticized that “above all the refineries” would make money from the high fuel prices. “A rigorous investigation of these finished product markets by the European competition authorities is needed,” said the ÖAMTC. “Because it is unacceptable that markets that trade only a fraction of European consumption can drive up prices for the whole of Europe so much.”
In the case of gas stations, the competition watchdogs were only able to identify “indications of substantially increased gross margins” for March. In the months that followed, gross margins were only “slightly above their pre-war level”. “The investigation at the petrol station level suggests that a lack of competition between petrol stations is not the cause of the increased petrol station prices, but that the cause is in particular the increased international price quotations,” writes the BWB in its industry investigation.
The Federal Competition Authority has also calculated a practical example: Converted to a 50 liter tank filling, consumers would have paid an average of 11 euros net more in the first half of June compared to the time before the beginning of the war, solely due to the increase in crude oil prices, both for diesel and for petrol. In addition, due to the increase in gross margins, consumers would pay EUR 9.50 more net for a tank of diesel and EUR 10.50 more for a tank of petrol. VAT must then be added.
Market participants affected by the industry investigation can submit a statement on the preliminary results of the investigation to the BWB until July 27th. According to the authority, if an industry investigation does not find any “court-proof evidence” of cartelization or abuse of market power, structural or behavioral pro-competitive conditions cannot be immediately ordered or applied to the cartel court. The instrument of the house search is not available in an industry investigation.