Predatory pricing charges vs major oil firms dropped

A task force composed of representatives from the Department of Justice (DOJ) and Department of Energy (DOE) has junked the predatory pricing charges filed against the three oil majors, New Petroleum Players Association (NPPA) president Fernando Martinez said.

The charges were filed last February by the NPPA and the Liquefied Refillers Association which accused Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex (Philippines) Inc. of selling diesel and LPG at predatory prices.

Under the Oil Deregulation Law of 1998, predatory pricing is selling or offering to sell any oil product at a price below the seller’s or offeror’s average variable cost for the purpose of destroying competition.

Martinez said the complaint had become moot and academic because the LPG refillers failed to support their claims. He said since the oil firms eventually decided to adjust their LPG selling prices, pursuing the case became unnecessary.

Based on their complaint, NPPA and the LPG refillers alleged that the Big "3" were not aligning their LPG prices on the movements of the LPG international contract price, which increased dramatically in the latter part of last year.

The oil majors argued that they are not into predatory pricing but only applying their respective company policies. While NPPA and LPG refillers were selling their 11-kilogram cylinder at P285 to P295, they alleged that the Big 3 were offering their products at P225 to P265.

According to the group, these move of the Big "3" resulted to a cut in their market share.

At present, the Big "3" corner about 75 percent of the market while the new players account for about 25 percent. But, the new players expect their share to increase to 35 percent this year.

Last February, the three leading oil firms raised their LPG selling prices by P16.50 per 11-kg cylinder. A month later, the oil majors, rolled back their prices by same the amount due to lower international LPG prices. – Donnabelle Gatdula