Trade watchdog to probe refiners' fuel-price hikes

The Fair Trade Commission has launched an investigation to determine whether the nation's two largest oil refiners are guilty of price collusion after they both hiked wholesale fuel prices on Tuesday.

Three hours after Formosa Petrochemical Corp (台塑石化) on Tuesday raised its wholesale prices of gasoline and diesel oil by NT$1.50 per liter, its larger rival, the state-run Chinese Petroleum Corp (CPC, 中油), followed suit.

The price hikes came less than two weeks after the commission maintained its ruling to fine CPC and Formosa Petrochemical NT$6.5 million (US$203,760) for dogging each other with reciprocal price moves.

Chen Jung-lung (陳榮隆), commissioner of the Cabinet-level commission, said that the two companies on Tuesday announced the same range of price hikes at different times, as opposed to their previous move of raising prices at almost the same time.

"It seems better this time, but we still have to investigate whether they communicated with each other beforehand to make the decisions," he said.

According to Article 14 of the Fair Trade Act (公平交易法), if the companies are found guilty of price collusion a second time, they will face a maximum fine of NT$100 million, and company executives might be put behind bars for up to three years, he said.

The Consumers' Foundation (消基會) has voiced strong opposition to the price hikes, saying that CPC reported pre-tax revenues of NT$24.88 billion last year, the highest in five years.

"We call on the government to listen to people's voices and to not let state-run enterprises take everything they want," the foundation said.

The Cabinet did not seem happy about the price hikes either. Premier Frank Hsieh (謝長廷) said that CPC, as a state-run company, should not follow others' steps in the future, according to Cabinet Spokesman Cho Jung-tai (卓榮泰), who spoke on Hsieh's behalf after a Cabinet meeting yesterday.

Cho said the premier understood the need for CPC to raise fuel prices and consequently approved its request on Tuesday afternoon.