CPC imposes sanctions to „Lukoil Neftohim Burgas“ AD and „Lukoil-Bulgaria“ EOOD amounting to 195 million BGN for abuse of a dominant position under the national and European competition law
By Decision No. 332/04.04. 2023 ruled on case No. KZK-255/2020, the CPC imposed a pecuniary sanction in the total amount of BGN 195 136 175 for an infringement committed by “Lukoil-Bulgaria” EOOD and “Lukoil Neftohim Burgas” AD under Art. 21, item. 2and 5 of the Protection of Competition Act (LPC) and Art. 102 item. 'b' of the TFEU, consisting in an abuse of a dominant position on the market for storage of motor fuels by not granting access to importers and producers of motor fuels to Lukoil-owned tax warehouses, restricting imports by sea by blocking the tax warehouses, related to PT Rosenets and PT Petrol Varna, and by not providing access to the group's petroleum product pipelines for the transportation of other producers and importers of motor fuels, which may prevent, restrict or distort competition and affect consumer interests by hindering the imports of motor fuels into the country.
Taking into account the socio-economic importance of fuels stemming from their direct impact on the prices of goods and services offered on the Bulgarian market, in the antitrust proceedings, the Commission carried out an analysis of the competitive environment of the markets along the automotive fuels marketing chain.
In the course of the proceedings, the Commission identified competitive problems related to the access to tax warehouses and therefore focused the investigation on the behaviour of Lukoil Neftohim Burgas AD and Lukoil Bulgaria EOOD (together referred as the Lukoil Group) manifested in restriction of access to tax warehouses and transport infrastructure, which is of such nature as to restrict the imports of fuels into the country.
The Commission established that the Lukoil Group owns the biggest storage and related transport infrastructure, which, combined with its high market share in the market for the storage of motor fuels, makes it the dominant undertaking on the relevant market. Based on the analysis of the behaviour of the companies, it was established that the undertaking pursued an overall strategy consisting of several anti-competitive practices, which, applied consistently and cumulatively for a period of more than 5 years, raised barriers to fuel imports, preventing them entirely or rendering them economically ineffective. The Commission concluded that the group has abused its dominant position through a combination of acts consisting of not providing fuel admission and storage services in its own tax warehouses, restricting access to tax warehouses linked to the country's largest marine oil terminals and not providing access to the group's oil pipelines for the transport of imported fuels.
The transition of motor fuels, which by their nature are excise goods, through own or rented tax warehouses is a mandatory requirement for all market participants who manufacture or import/perform intra-community acquisition of fuels in the territory of the country. This requirement has a direct impact on the import/export possibilities in the country and limits to a certain extent the entry of new market players, since the construction of own warehouses requires formidable investments while leasing capacities is limited due to the fact that the largest capacities in the country are owned by the dominant undertaking, which limits the access to them.
The practices represent an overall strategy of the group to erect barriers to the import of fuels into the country and qualify as a single infringement because they are aimed at attaining common anticompetitive result and are sustained over a long period time.
These actions of the companies restrict the competition at the first level of the petroleum products marketing chain - in the primary sale of automotive fuels from production and imports, which allows the Lukoil Group to maintain its dominant position in the country at the next levels - wholesale and retail. The creation of barriers to the import of fuels into the country is of a nature to cause a shift in demand towards fuels of local origin, i.e. those of Lukoil Neftohim Burgas AD. This reduces the choice of wholesalers and other players down the automotive fuel marketing chain and ultimately the consumers.
This conduct constitutes an abuse of dominance both under national law and under European Union law, since by restricting imports within the territory of the country it may significantly affect the pattern of trade between Member States. In the course of the proceedings, the Commission cooperated with the European Commission and coordinated the decision in fulfillment of the requirements of Regulation (EC) No 1/2003 on the implementation of the rules on competition laid down in Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).
The full text of the Decision is available in the public electronic register of the CPC at https://reg.cpc.bg