canary islands petrol stations price hike investigation

Canary Islands investigates 78 petrol stations over price hikes

Government launches fuel price probe

The Canary Islands Government is subjecting 78 petrol stations across the archipelago to an inspection process, in a bid to uncover the reasons behind the simultaneous price hikes that occurred as soon as the war in Iran broke out. Vice-President and Minister for the Economy, Manuel Domínguez, explained that this is the main reason behind the regional executive’s decision to take this second step – the inspection – which could open the door to a third scenario: referring the case to the competition authorities and the possibility of imposing sanctions.

What the inspection will involve

The inspection will consist of formally requesting documentation from those 78 petrol stations to determine whether consumer rights were respected and how pricing structures were formed between 1 January and 25 May, with a key date being 28 February – the first attack on Iran and the closure of the Strait of Hormuz, explained the Director General of Consumer Affairs, David Mille. Domínguez continued: “The aim of this measure is clear: to find out whether competition requirements have been met and whether the price rise was in line with market conditions, or whether there has been another factor of which we are unaware and which we must address.”

Findings from preliminary analysis

He indicated that the decision to launch an inspection is based on the conclusions of reports drawn up by the Canary Islands executive to analyse the rise in fuel prices, which point to several “dysfunctions” after analysing 499 petrol stations, from which 78 were selected. One of these dysfunctions is structural in nature: the “rocket and feather effect” commonly seen in times of uncertainty. This means sharp and sudden price increases within just 48 to 72 hours, followed by more gradual decreases that take between ten and thirteen days to show up in the final price paid by consumers.

Simultaneous price rises raise concerns

Another dysfunction detected is the simultaneous rise in prices across different operators, and it is here that the main question arises for the Canary Islands Government – an archipelago where four brands control 76.5% of the petrol station network. “Prices can go up but they should fluctuate between different operators… which has not been the case. It may be that the suppliers are the same and that could lead to identical behaviour, or it may not, and that is where the doubts arise,” Domínguez said. “Faced with this scenario, several questions emerge,” he added, “the main one being whether this is due to market conditions or whether other factors are at play, and whether there is a dominant market position.”

Potential consequences and next steps

Based on the results of the inspection, which will last one month and will begin as soon as it is published in the Official Gazette of the Canary Islands, the Ministry for the Economy must decide whether to close the case or, if appropriate, process a sanctions file which it would refer to the Canary Islands Council for the Defence of Competition or the National Commission for the Defence of Competition. Manuel Domínguez stressed that if there has indeed been “irregular conduct or abuse”, the Canary Islands Government will act accordingly, because “we are not going to let a situation that harms Canarian consumers go unchecked.”

Broader economic context

Meanwhile, the Vice-President and Minister for the Economy played down the potential impact on petrol and diesel prices of the expiry, at the end of this month, of the decree on temporary aid measures, such as the application of a zero rate of IGIC (the Canary Islands general indirect tax) and the 99% subsidy for hauliers. He welcomed the “good news”, such as the possible end to the armed conflict and the reopening of the Strait of Hormuz, following the excessive increase in fuel prices in recent months. “In fact, the price of a barrel of crude oil has begun to fall, although its effect is not yet being felt at the pumps, and that worries us,” he concluded.

Source

Scroll to Top