Closes investigation against Circle K and YX

The Norwegian Competition Authority has today closed an investigation against Circle K Norge AS and YX Norge AS. The two companies have agreed to end their practice of publishing recommended list prices for retail fuel on their websites.

Autumn 2019, the Competition Authority opened an investigation against Circle K and YX due to concerns that Circle K and YX cooperated on setting retail fuel prices. In particular, the Authority was concerned that the publishing of recommended list prices facilitated parallel national lifts on pump prices. Such behaviour may be in breach of the prohibition against anticompetitive agreements and concerted practices.

– We have been concerned about competition in the fuel market for some time, and have closely monitored this market for several years. In the autumn of 2017, we observed a change in the weekly price pattern, which raised concerns about possible illegal conduct, says Director General Lars Sørgard.

Changed price pattern
Until 2017, a weekly cycle of pump prices at retail fuel stations followed a pattern whereby prices increased up to the level of recommended list prices every Monday and Thursday. On 29 November 2017, Circle K announced that it would change its pricing strategy with a view to reducing the extent to which pump prices fluctuated during the week. This led to a change in the weekly price pattern. Instead of increasing on Mondays and Thursdays, pump prices appeared to increase more randomly on any day of the week. Such price increases give customers reduced predictability as to when it is most economical for them to refuel.

On days Circle K has increased its pump prices following its announcement in 2017, it has first published a new, updated recommended list price on its website at 8 o’clock in the morning. YX has thereafter published an updated recommended list price on its website, before both companies have increased their pump prices simultaneously at 10 o’clock the same morning. Other retail fuel companies have then increased their prices accordingly.

Signalling
Publishing recommended list prices on the internet has limited value for customers, but is of great value to competitors. Even if pump prices have been increased on different days of the week, the publishing of recommended list prices on the companies’ websites has acted like a signal to competitors that prices are supposed to increase at 10 o’clock. This has made competing suppliers aware of when, and to what level, they could increase their prices.

This practice has taken place at a national level, and not been limited to a single geographic area.

Practice brought to an end
Circle K and YX do not share the Competition Authority’s competition concerns, but have nevertheless committed to refrain from publishing recommended list prices for retail fuel on their websites. Both Circle K and YX chose to end this practice before the commitments were made binding by the adoption of the Authority’s decision on 15 October 2020.

According to the commitments, Circle K and YX shall not either publish anything, which will give competitors similar information as published recommended list prices. The commitments have a duration of five years.

– The commitments will make it less predictable for retail fuel companies when their competitors will increase their prices, and to what level. Thereby, the commitments will contribute to that each company sets its prices individually, without knowledge about what their competitors intend to do. This may give consumers more options with regard to when, and where, it is most beneficial for them to refuel, says Deputy Director Marita Skjæveland.

The Competition Authority will continue to monitor the retail fuel market. If Circle K or YX do not act in accordance with the commitments, the Authority may reopen the investigation with the possibility of imposing fines for non-compliance with the commitments.

It is the second time the Competition Authority decides to close an investigation and adopt a commitment decision, making the commitments binding on the companies under investigation.