Galp fined for anti-competitive bottled gas supply

Galp Energia has been fined more than €9 million for anti-competitive practices by Portugal's Competition Authority which detected "grave breaches."

Petrogal, Galp Azores and Galp Madeira, all Galp Energia group companies, will have to pay €9.29 million in fines due to anti-competitive practices in the bottled gas market.

The fine from the Competition Authority follows a request for an investigation under the Authority's fuel market supervisory powers.

"The investigation by the Competition Authority found that Galp Energia companies prohibit their Liquefied Petroleum Gas bottle distributors to sell outside the geographical area defined in their contracts, thereby preventing them from competing with other distributors in neighboring territories."

"This competitive constraint is likely to penalise consumers with higher prices, since these Galp Energia bottled gas distributors can charge prices and set commercial conditions without any competitive pressure from other distributors" reads the Competition Authority's summary, which added that this represents a grave breach of competition rules.

The applicable legislation indicates that a request for a ‘passive sale,’ where someone outside the normal delivery area requests gas, may not be rejected.

This stops consumers choosing gas from a nearby distributor should the price be lower than locally. This is anti-competitive and the Galp distributors have had to refuse delivery outside their area as their contracts prohibits this.

The Competition Authority found that in 240 Petrogal contracts, 199 of them prohibited these passive sales outside the distributor’s territory, while in Galp Azores and Galp Madeira, all contracts forbade passive sales outside the contract area.

In the case of Petrogal, this behaviour has been going on for 15 years, Galp Azores has been acting in this way for 13 years, and while Galp Madeira has been at it for three years only.

Bottled LPG normally is used for domestic heating systems, for heating water and for cooking with over 2 million families paying an average annual bill of around €250.

Consumers may soon be able to shop around and the hope is that gas prices generally may drop. Why this anti-competitive behaviour by Galp has taken 15 years to be spotted and adjuciated remains unanswered.

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