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Bill proposed to deter ‘cartel’ behavior in downstream fuel industry

bill proposed to deter cartel behavior in downstream fuel industry 816x445 - Bill proposed to deter ‘cartel’ behavior in downstream fuel industry

A LEGISLATOR said he is proposing a bill to thwart the formation of a monopoly in the downstream oil industry.

The alleged “lack of transparency” in the pricing mechanisms of the Philippines’ oil majors raises the possibility of potential collusion, according to Senator Sherwin T. Gatchalian.

The legislator, who also leads the Senate energy committee, said he is “planning to file a bill that will give more teeth to existing laws in the downstream oil industry.”

His office is also “studying ways to strengthen the anti-trust safeguards in the Republic Act No. 8479 (Downstream Oil Industry Deregulation Act) and how it can interact with the Philippine Competition Act.”

The Supreme Court recently barred a Manila court from ordering a review of the books of accounts of Petron Corp., Pilipinas Shell Petroleum Corp., and Chevron Philippines, Inc.

In 2009, a Manila Regional Trial Court ordered the Bureau of Customs, Bureau of Internal Revenue, and Commission on Audit to examine the companies’ accounts for any evidence of collusion. The agencies declined, saying that such examinations exceed their mandates.

The Supreme Court said the proper agency to conduct the examination was a joint task force of the Energy and Justice departments, to look into any breaches of the Oil Industry Deregulation law. The task force subsequently found no antitrust violations.

Stiff competition within the oil industry should have led to lower pump prices, but this is “simply not happening,” said Mr. Gatchalian.

“The promise of the law is to provide reasonable prices, encourage competition and investments,” he said.

The pricing of petroleum products mirrors that of the movement of the Mean of Platts Singapore benchmark, according to the Department of Energy.

In 2019, the three oil companies controlled about half of the market for petroleum products, according to the DoE-Oil Industry Management Bureau. Petron had a 24.59% market share, followed by Pilipinas Shell with 18.49% and Chevron Philippines, which markets Caltex products, with 7.57%. — Adam J. Ang

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