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Petroleum giants face punishment for price collusion

STAFF WRITER
Friday, Mar 11, 2005, Page 10

Chinese Petroleum Corp (中油) and Formosa Petrochemical Corp (台塑石化) may again be facing government fines for price collusion after the two oil refiners yesterday announced price hikes almost simultaneously.

Citing a rise in international crude oil prices, state-run Chinese Petroleum announced yesterday afternoon that it will raise its wholesale gasoline and diesel prices by NT$1 per liter across the board, an average increase of 5.37 percent, effective from 5pm yesterday. The company also adjusted its prices for natural gas with an average increase of 2.99 percent that went into effect from midnight yesterday.

An hour after Chinese Petroleum's announcement, Formosa Petrochemical said that it would match its rival's move by raising its wholesale gasoline and diesel prices by NT$1 per liter, also taking effect at 5pm yesterday.

Formosa Petrochemical said it is under increasing pressure from rising oil prices, with global crude oil prices having surged 26 percent to US$54.7 per barrel from US$43.6 on Dec. 30, the last time the company adjusted its wholesale prices.

The two companies will increase the price of 98 octane unleaded gasoline by NT$1 a liter to NT$22.617.

In response to allegations of price collusion, the Fair Trade Commission said yesterday that it may impose fines of up to NT$50 million (US$1.58 million) if the two companies are found to have engaged in the practice again, the commission's spokesman Chen Jung-lung (陳榮隆) said.

The commission in October fined the two rivals NT$6.5 million each for engaging in price collusion after ruling that they had violated fair-trade laws and consumers' rights.

Minister of Economic Affairs Ho Mei-yueh (何美玥) said the ministry will not step in to regulate the two companies, as prices were decided by market forces.

Ho hoped Chinese Petroleum Corp and Formosa Petrochemical Corp would lower their wholesale prices once the price of crude oil drops.
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