NMa Draws up Report on Texaco Due to Thwarting of Tango in the Nijmegen Region

The Dutch Competition Authority (NMa), after conducting an investigation, has drawn up a report against Texaco. The report is the result Texaco's thwarting of Tango, a newcomer to the Nijmegen region, by means of a discount campaign coordinated by Texaco and involving four Texaco filling stations. By means of a sharp reduction in sales prices, Texaco attempted to undermine Tango's position. This involved independent filling stations, which, instead of setting their own sales prices, entered into price agreements on the instigation of Texaco.

The petrol market is a market that offers few opportunities to new entrants. Although petrol is an homogenous product, there is hardly any competition on price. Tango is a newcomer to this market. The Tango petrol stations are unmanned and are operated on a fully self-service basis. This translates into lower consumer prices, which promotes price competition. A price agreement aimed at nipping in the bud the price competition introduced by Tango is a serious contravention of the Competition Act.

In the period from 15 April up to and including 17 July 2000, four Texaco filling stations in the neighbourhood of the Tango filling station collectively lowered their prices, taking Tango's prices as the basis for their prices. The cost of this campaign was borne by Texaco. During the first week, the filling stations in question offered a discount of 30 cents on the recommended price of petrol and diesel, and consequently charged a maximum price that was 15 cents below the price charged by Tango. In the period after this, the filling stations collectively charged lower discount prices (the four Texaco stations charged prices that were two cents higher than the price that Tango charged for petrol and diesel).

Although consumers benefited from these discount campaigns in the short term, the long-term effect of these may be that Tango will disappear from the market. This would probably also mean the end of price competition. According to NMa's investigation, Tango has suffered a loss both with regard to the volume of its fuel sales and with regard to its margin. This agreement has therefore had the effect of obstructing the entry of Tango into the market.

In its investigation, NMa also examined other filling stations in the neighbourhood of the Tango filling stations, but did not come across any evidence of coordinated action.

The parties involved have now been given the opportunity to respond to the report. After this, the Director-General of NMa will make a final ruling on whether an offence has been committed and, if so, whether a fine or other penalty will be imposed.

In addition to the investigation in the Tango case, NMa is involved in a broad investigation into the possible existence of a cartel on the petrol market. NMa will make further announcements on the progress of its investigation in the summer.