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Call for probe on oil companies over Hong Kong fuel prices as competition watchdog reveals ‘unusual’ market practices

Commission finds that oil companies have been offering more expensive type of petrol

PUBLISHED : Saturday, 06 May, 2017, 4:01pm
UPDATED : Saturday, 06 May, 2017, 10:52pm

Hong Kong’s anti-trust regulator has said that its recent revelation of “highly unusual” practices in the petrol market could force oil companies to explain their business policies.

The comment by the Competition Commission came after it was questioned for being unable to confirm if there was any collusion in the market.

Commission chairwoman Anna Wu Hung-yuk also renewed her call for the government to give it more power to obtain information from business conglomerates.

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On Thursday, the watchdog issued a study report, which revealed that drivers lacked choices as oil companies offered only the most expensive type of petrol – called 98 RON – to motorists even though a cheaper type, 95 RON, could also be used by almost all of the city’s vehicles.

The report found that such problems resulted in Hong Kong having the “highest petrol prices in the world”.

According to the report, the average price for petrol in Hong Kong was about HK$15 per litre, higher than in Singapore, which charged below HK$12.

But the regulator said there was no sufficient evidence to show that the five oil companies which dominated the city’s petrol market – Esso, Shell, Caltex, Sinopec and PetroChina – entered into a cartel agreement.

Apart from criticising the government for failing to encourage competition, some academics also said it was “disappointing” that the commission failed to gather more evidence.

Speaking on a TVB programme on Saturday, Wu said the report could encourage the public to press the oil companies for transparency.

“We asked some oil companies why they do not sell 95 RON, which can be 15 per cent cheaper, and their reply was that ‘no one has requested it’ ... If you don’t agree with this, you can speak up,” she said.

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Wu also agreed that the government should consider giving the watchdog more authority, as it could not launch any probe without gathering enough information to justify the need.

“We would definitely investigate if we have enough on hand,” Wu said.

But speaking on an RTHK programme, Stanley Chiang Chi-wai, spokesman for the truck drivers’ group Land Transportation Alliance, said there was already a pressing need for a probe.

“The discounts offered by oil companies are unfair ... because I know that some large companies are charged less than HK$5 per litre nowadays while we need to pay [at least] HK$11.6,” Chiang said.

“We are being exploited and our competitiveness in the market is undermined.”

University of Hong Kong law professor Kelvin Kwok Hiu-fai also agreed that it was time for the watchdog to launch a probe.

In the first legal action since the city’s competition law came into effect in 2015, the commission took five information technology companies to a tribunal for alleged bid rigging in March.

Wu revealed on Saturday that the commission will take one or two more similar legal actions this year, while continuing to investigate about 100 complaints.