Competition authorities raid Statoil

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UPDATED: Officials from the European Free Trade Association’s surveillance authority raided the headquarters offices of Norwegian state oil company Statoil in Stavanger on Tuesday, with the help of Norway’s own competition authorities (Konkurransetilsynet). The raid stems from suspicions that Statoil and other companies have struck deals that hinder competition and abuse dominant market positions.

Jannik Lindbæk, information director at Statoil, told Norwegian Broadcasting (NRK) that Statoil officials would “cooperate fully” with the authorities “to clear up” their concerns and suspicions about any violation of competition rules. Concerns were rising that Statoil and other companies were being accused of manipulating the prices of oil and oil products since 2002.

Suspected EEA violations
The European Free Trade Association (EFTA) is made up of the small group of countries (Norway, Iceland and Liechtenstein) that has a special European Economic Area (EEA) agreement (called the EØS-avtale in Norwegian) to do business with the European Union. The EEA agreement provides Norway with access to the EU’s markets and is regulated by the EFTA Surveillance Authority (ESA). Statoil reported in a press release Tuesday afternoon that the surprise “inspection visit” by the ESA was being carried out “on request of the European Commission.”

Statoil’s share price tumbled when news of the raid started to spread Tuesday afternoon. Lindbæk said neither he nor other Statoil officials knew which other companies were under investigation by the ESA. The Financial Times and other media later identified them as BP of the UK, Royal Dutch Shell and Platts in London.

Lindbæk said it was “too early” to disclose exactly which deals were in the authorities’ spotlight. “These are examinations that are starting today,” Lindbæk told NRK, “so we’re hoping for more clarification about what this is all about as their examination proceeds.”

Statoil’s press release elaborated a bit, reporting that the authorities “suspect participation by several companies, including Statoil, in anti-competitive agreements and/or concerted practices contrary to Article 53 of the EEA Agreement. In addition, the inspection relates to potential abuse of possible dominant position by another party, contrary to Article 54 of the EEA Agreement.”

Pricing concerns
Statoil went on to write that the suspected violations are “related to the Platts’ Market-On-Close (MOC) price assessment process,” which is used to report prices in particular for crude oil, refined oil, products and biofuels. The suspected violations may have occurred over the past 11 years, Statoil said.

Officials at ESA itself wouldn’t immediately comment on why the ESA inspectors arrived unannounced at Statoil’s main offices at Forus on Tuesday. A press release from the European Commission said other raids were taking place in two other EU countries, and that it suspected cooperation on reporting incorrect oil prices to manipulate the official prices on several oil products and biofuels.

The commission reported it also was concerned that the companies may have hindered others from participating in the price-setting process, with a goal of influencing published prices. Oil industry analysts described the suspicions as “serious,” according to website dn.no.

The raid occurred on the same day Statoil was holding its annual shareholders meeting, at which the company was facing other challenges from shareholders unhappy with Statoil’s controversial participation in the Canadian oil sands projects in northern Alberta. Newspaper Dagens Næringsliv (DN) reported that Boston Common Asset Management had joined Norwegian shareholders including insurance company Storebrand, Folksam and Greenpeace in opposing the oil sands project that long has been criticized by environmental organizations.

Views and News from Norway/Nina Berglund

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