NMa: competition between motorway petrol stations leaves room for improvement

Competition between motorway petrol stations is lagging behind, while filling stations along the subsidiary network of main roads are strongly competitive. The Netherlands Competition Authority (NMa) establishes this in its scan of the petrol market for 2005.

Though auctions have taken place, the five main companies have retained a large share in the number of petrol stations along the main roads network. According to the NMa scan, their share in petrol stations along motorways even amounts to ninety percent. Therefore, the NMa concludes that the auctions' original objective, an increase in competition (i.e. 'breaking open the market to new entrants') has hardly been met. Current licensees are placed in an advantageous position compared to new entrants as a result of the way in which the auctions are set up. When a petrol station comes up for auction for the first time, the proceeds of this auction will go towards the current licensee. In this way, oil companies are compensated for the loss of their eternal license for locations along the national network of main roads. As the current licensee may join the bidding for his own station, it is possible for him to place a limitlessly high bid in order to safeguard the licence for the next fifteen years. An important advantage is generated by the so-called 'top segment settlement' [topdeelregeling]. This means that whenever a licensee is himself the highest bidder for his petrol station, he ought to pay a so-called 'top segment' to the state, as he will otherwise gain the petrol station for free, for he is allowed to keep the proceeds of the auction. The 'top segment' consists of the difference between the two highest bids, amounting to a maximum of 15% of the highest bid. Because of this 15% limit, the license holder never pays the amount which a non-license holder, for instance a new market party, has to pay. 'For this reason also, we have advised the Ministers of Economic Affairs and Finance, who are in charge of the auctions, to evaluate the auctions' set-up', states René Jansen, member of the Board of the NMa.

According to the NMa, petrol stations along motorways in general adhere to recommended selling prices, while stations along the subsidiary road network offer reductions on these recommended selling prices which may amount to approximately 10 eurocent per liter. 'At the moment, petrol prices are often not clearly visible from the road in the case of many petrol stations, which makes it harder for consumers to decide on the basis of a price comparison. By increasing price transparency along the motorways, competition will be given a new impetus'. In this respect, Jansen puts forward the idea of 'price information signs' along motorways, which are to advertise petrol prices available to drivers at various petrol stations along the motorway. The NMa has informed the Minister of Transport, Public Works and Water Management of this suggestion in a letter.

As was announced at the start of the petrol scan in 2003, the NMa has now presented its third and last report on developments in the petrol market. The reason for the scan was the NMa's decision to terminate its investigation into the petrol market and refrain from prohibiting support systems provided by oil companies to petrol station owners. The NMa will in future continue to monitor developments in the petrol market and will remain alert for signals in this sector. The full text of the petrol scan has been made available on the NMa website: www.acm.nl.