Supply of solid fuel and charcoal products competition breach
First published by Author on June 15, 2018 in the following categories: Bid-Rigging Market Sharing Pricing and tagged with bid-rigging | cartels | marktet sharing | pricing
The CMA say they have found that a fuel cartel has been in place following their investigation into the supply of solid fuel and charcoal products coming to a head.
The CMA (Competition and Markets Authority) has fined two of the main suppliers in the market of bagged household fuels a total of £3.4 million having been found to have taken part in an illegal market-sharing cartel.
The two suppliers, CPL and Fuel Express, have been found in breach of competition laws by rigging competitive tenders for the supply of fuel products to Tesco and Sainsburys.
The cartel between CPL and Fuel Express centred on an agreement for one company to deliberately set a higher bid that was designed to lose so the existing supplier could retain the customer. This ensured that they could share the market without any need to compete with each other, which is a blatant breach of competition laws and serves only to increase their own profits as opposed to helping the consumer through competitive pricing and product innovation.
This kind of anti-competitive behaviour is a selfish endeavour that allows companies to profit and consumer to pay more. The blatant bid-rigging was identified as part of the CMA’s investigations that have led to the perpetrators being fined.
Alarming evidence found
Some of the evidence uncovered by the CMA was alarming. In one such example, an invitation to tender from Tesco led to the current supplier, Fuel Express, to email the competition, CPL, and ask them to quote above a certain amount, meaning CPL took this “pricing steer” into account when designing their own bid.
And this kind of behaviour was of course returned in kind.
Competition law breaches
CPL and Fuel Express were found to have breached competition law by bid-rigging and market sharing. Their behaviour meant they had no motivation to compete which can stifle the market and lead to higher prices and no innovation.
At the end of the day, neither competitor has any desire to lower their prices because there was no competition to fight off given that they were working together illegally.
The end-consumer is the one who ultimately pays the higher price. That’s more profit for the companies acting illegally at the direct expense of the consumer. We welcome the CMA’s decision and fine, and we hope it acts as a stern warning to others to refrain from engaging in this kind of unfair practice.