Meer concurrentie op Spaanse markt voor tankstations - vraag en antwoord over REPSOL (en)

(See also IP/06/495)

Who is REPSOL?

The commitments have been offered by REPSOL Comercial de Productos Petroliferos ("Repsol CPP").

Repsol CPP, incorporated in Madrid, Spain, is a company belonging to the Repsol-YPF oil group. The group is active throughout the production and supply chain of oil products. In Europe, this group is active mainly in Spain and in Portugal. It possesses, among other assets, substantial refining capacity in Spain. Repsol CPP is active mainly in the distribution of fuel, lubricants and similar products for motor vehicles in Spain.

Which market is concerned by REPSOL's commitments?

The motor fuel market in Spain amounts to more than 40 million tons sold yearly, mainly diesel (around 33 million tons, or more than 80% of total sales). This market had a value of €14 billion before tax in 2004, and over€18 billion before tax in 2005.

What is the structure of the motor fuel market and who are REPSOL's competitors?

The motor fuel market is highly concentrated. Major players besides Repsol CPP (which has a market share of around 40%) include Cepsa, BP and Shell. All of Repsol CCP's competitors have a market share below 10%, except Cepsa, which has a market share around half of Repsol's share. Vertical integration in the market is very high: around half of all service stations in Spain are owned by the wholesale suppliers and, contrary to other Member States' markets, the Spanish market has not experienced an increase in the number of "white stations" (unbranded stations) or of stations owned by supermarkets.

What are the long-term agreements between REPSOL and service stations about?

In the years following Spain's EU accession (1986), the motor fuel market was gradually liberalised: the former monopoly of CAMPSA was dismantled andrestrictions on the building of new service stations were removed.. Accordingly, Spain, which had a very low number of service stations per inhabitant compared to other EU markets, witnessed large-scale construction and refurbishment of service stations. Some owners of bare land or of old service station buildings entered into long-term contracts with the main suppliers of fuel at the time, in particular Repsol CPP.

According to the contracts signed with Repsol CPP, land owners granted a "right in rem" for a long period (from 25 to 40 years) to Repsol CPP on their land or on their land and building: Repsol CPP would then finance the construction/refurbishment of the station, rent the station back to the owner and, for the duration of the "right in rem" be the exclusive supplier of motor fuel to the station.

Around 500 similar contracts signed by Repsol CPP are still in force today. The commitments will allow the bare owners to terminate their contracts with Repsol CPP. They will thus be able to earn higher margins per litre of fuel sold and become fully independent stations. Repsol CPP will get a compensation for the termination of its "right in rem".

Why are the long-term contracts a problem?

The Commission's investigation has shown that access to the market is rather difficult because of its structure and in particular the vertical integration of all operators. Exclusivity contracts signedbetween the operators and the remaining independent service stations tie these stations for long periods of time to the operators, thereby further hampering competition The contracts signed by Repsol CPP, in particular the long-term contracts which were based on "rights in rem" owned by Repsol CPP (see above), particularly contribute to close off the market. This diminishes ultimately the pressure to reduce prices and improve quality, to the detriment of consumers.

What are the other commitments made by REPSOL?

Repsol CPP has taken a number of other commitments that it will implement until 31 December 2011. First of all, Repsol CPP has committed not to conclude any new supply contracts exceeding 5 years with service stations. Also, Repsol CPP has committed not to purchase any independent station that is not supplied by Repsol CPP during the first two years following the Commission decision. Finally, Repsol CPP has committed to ensure that all service stations within its network are able to provide discounts on the price recommended by Repsol: discounts should be possible also for stations which only act as agents of Repsol (in such cases the station will be able to share its commission with the client in order to reduce the price for the client).

The commitments differ from those published in October 2004 for the comments of interested parties. Why?

The procedure pursuant to Article 9(1) of Regulation 1/2003, rendering commitments offered by undertakings legally binding, requires the publication of a summary of the commitments so that interested parties can submit their comments to the Commission (a so-called market test).

In response to the Commission's publication of 27 October 2004, it received 25 observations, most of which indicated that the identified competition concerns would not be resolved by the proposed commitments. As a consequence, Repsol CPP offered amended commitments addressing the relevant points raised by third parties. In particular, the formula determining the compensation to Repsol CPP for the termination of its "right in rem" has been revised to make sure that the service stations will have a concrete incentive to terminate their long-term contracts with Repsol CPP.

Why is the Commission not addressing the claims that certain service stations are not free to grant discounts?

In its preliminary assessment, the Commission had noted that the provisions of the contracts signed by Repsol CPP did not prevent service stations from granting discounts on the price recommended by Repsol. However, during the market test pursuant to Article 27(4) of Regulation 1/2003 (see above), some market participants claimed that some service stations in the Repsol network are not in practice in a position to grant discounts. Arguments and factual issues submitted in that respect had not been in the Commission's possession when it made its preliminary assessment and would thus require further analysis. However, the Commission does not take a position vis-à-vis these claims in its final decision because, as noted by the same market participants, this issue is already the subject of a procedure by the Spanish Competition Authorities.

In order to promote competition, the commitments ensure, in any event, that all service stations within the network of Repsol CPP are able to provide discounts on the basis of the price recommended by Repsol CPP.

Why is the Commission not addressing the claims that certain service stations should not be considered as "agents"?

The choice of a service stations' status ("agent" or "reseller") is a contract matter which the parties to a contract are free to decide; it does not raise a competition concern per se. This status is not relevant to the competition concerns identified by the Commission, i.e. the closing off of the market through exclusivity agreements.

How can I know if my service station is concerned?

The text of the commitments includes a list of the service stations concerned. Any error or omission can be reported to the monitoring Trustee who will supervise compliance with these commitments. The text of the commitments, the Trustee Mandate and the Trustee's contact details will be published on the Commission's and Repsol CPP's websites within a month.

What happens if REPSOL fails to respect the commitments?

The effect of a Commission decision based on Article 9(1) of Regulation 1/2003 is to render the commitments legally binding on Repsol CPP. Should Repsol CPP fail to respect the commitments, the Commission could decide to impose fines of up to 10% of its total turnover without having to establish that Repsol CPP has violated the competition rules.