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Competition Bureau of Canada

Competition Bureau

Consumer Fact Sheet on Gasoline Prices

August 4, 2004

What Can be Done About Gasoline Prices?

The federal government does not control the price or distribution of most goods and services sold in Canada - including gasoline. Regulation of retail gasoline prices is under provincial jurisdiction. However, price-fixing and other anti-competitive activities are illegal under the Competition Act.

What is the Competition Bureau Doing About Gasoline Prices?

The Competition Bureau is an independent law enforcement agency responsible for the administration of the Competition Act, which includes provisions against price fixing, price maintenance and abusive behaviour by a dominant firm resulting in a lessening of competition. All of its provisions apply to gasoline and other petroleum products markets. Each year, the Bureau receives numerous complaints about gasoline prices. Complaints are examined to determine whether the provisions of the Competition Act have been violated.

On May 4, 2004 the Bureau commenced an examination of the Canadian petroleum market to determine whether recent increases in retail gasoline prices may have resulted from a breach of the Competition Act. Since announcing its examination, the Bureau has taken the following measures:

  • responded to close to 350 complaints and information requests from consumers and independent retailers either by letter or by a telephone call from an investigator depending on the circumstances;
  • retained an economic expert to assist in the examination;
  • obtained data on gasoline and crude oil prices;
  • met with and obtained information from numerous industry participants; and
  • appeared before the Nova Scotia Legislature's Select Committee on Petroleum Product Pricing.

As part of its ongoing review, the Bureau is currently analysing information from industry experts and participants from all sectors of the petroleum industry to determine whether there has been a breach of the Act. More specifically, the Bureau is studying refiner margins, crude oil and retail price indexes and other industry data to determine if the rapid increase in the price of retail gasoline in May and June 2004 was due to anti-competitive conduct or to other factors.

In particular, the examination focuses on whether the price increases resulted from a conspiracy among oil companies to fix or coordinate prices or other anti-competitive practices by one or more dominant firms in the industry, or whether there could be some other explanation such as worldwide and/or North American supply and demand changes.

If the Bureau has evidence of criminal violation of the Competition Act, such as price-fixing, it can refer the case to the Attorney General of Canada and recommend prosecution. This can result in heavy fines, prison terms, or both, for offenders. If the Bureau has evidence of a civil contravention of the Act, such as abuse of dominant position, it can apply to the Competition Tribunal or the courts for a remedial order.

What Kinds of Activities are Illegal Under the Act?

It is illegal for gasoline retailers:

  • to agree to fix prices or enter into other anti-competitive agreements;
  • to try to influence another retailer's prices by agreement, threat or promise; or
  • to persuade wholesalers to cut off gasoline supplies to discount retailers, because of the discounters' low prices.

It is illegal for gasoline wholesalers:

  • to agree to fix prices or enter into other anti-competitive agreements;
  • to try to influence a retailer's prices by agreement, threat or promise; or
  • to refuse to supply a gasoline retailer just because that retailer charges low prices.

All of these activities are illegal under the criminal provisions of the Competition Act. To convict someone of such an offence, the evidence must be convincing "beyond a reasonable doubt" - it must meet the standard criminal law test.

Franchise retailers who sell gas on consignment often change their prices on instructions from their head offices. This is not illegal under the Competition Act.

The non-criminal provisions of the Competition Act may also come into play to address abuses of market power that exclude competitors from a market. Under the abuse of dominant position provisions of the Act, the Competition Tribunal may issue an order to remedy anti competitive acts engaged in by one or more dominant firms that prevent or lessen competition substantially.

How do I Complain?

If you have any evidence of improper communications, illegal agreements among competitors or evidence of the impact of the alleged anti-competitive conduct please contact the Information Centre of the Competition Bureau.

If you are an employee of a company which you believe may be engaged in a criminal offence under the Act, the whistleblowing provisions of the Act will protect your identity and guard you against retaliation by your employer. Any information provided will be kept strictly confidential.

If you are involved in conduct which you believe may be contrary to the Act and you wish to disclose that fact but are afraid of being prosecuted, the Immunity Program may provide you with immunity from prosecution or favourable treatment in return for cooperation.

Examinations under the Act are carried out in private and all information obtained during the course of an examination is treated on a confidential basis.

Toll-free: 1 800 348-5358
National Capital Region: (819) 997-4282
TDD (for hearing impaired): 1 800 642-3844
Fax: (819) 997-0324
E-mail: compbureau@cb-bc.gc.ca
Web site: http://www.cb-bc.gc.ca/


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