PCA has imposed a total fine of € 9,29 million euros on Petrogal, Galp Açores e Galp Madeira – part of Galp Energia group – for anticompetitive practices in the Portuguese bottled LPG market

 Press Release 01 /2015
 
The Portuguese Competition Authority has imposed a total fine of €9.29 million on Galp Energia for anticompetitive practices in the bottled LPG market
 

​The Portuguese Competition Authority has imposed a total fine of €9.29 million on Petróleos de Portugal - Petrogal, S.A. (“Petrogal”), Galp Açores - Distribuição e Comercialização de Combustíveis e Lubrificantes, Lda. (“Galp Açores”) and Galp Madeira - Distribuição e Comercialização de Combustíveis e Lubrificantes, Lda. (“Galp Madeira”), which are part of the Galp Energia Group, for anticompetitive practices in the Portuguese bottled LPG market.
The in-depth investigation carried out by the Portuguese Competition Authority found that Galp Energia forbids its distributors from selling bottled LPG outside their allocated territory, thereby stifling intra-brand competition between these distributors.
With this practice, Galp Energia has artificially partitioned the Portuguese bottled LPG market and limited competition to the detriment of consumers. The territorial restrictions imposed by Galp Energia are likely to harm consumers with higher prices by allowing the distributors of bottled LPG to set their prices and commercial conditions without any competitive pressure from other distributors.
This conduct constitutes a serious infringement of Article 9 of Law 19/2012 (the Portuguese Competition Act) and of Article 101(1) of the Treaty on the Functioning of the European Union. The infringement of competition rules lasted at least 15 years in the case of Petrogal, 13 years for Galp Açores and 3 years for Galp Madeira.
This Decision of the Portuguese Competition Authority can be appealed to the Competition, Regulation and Supervision Court.

Background
Bottled LPG (also known as bottled gas) is often used for home heating, production of hot water and cooking. It is estimated that more than 2 million Portuguese families use bottled LPG, spending roughly €250 on bottled LPG per year (including taxes). The Portuguese market of bottled LPG is currently worth at least €330 million per year, with mainland Portugal accounting for approximately 90% of that.
In the framework of a sector inquiry conducted by the Portuguese Competition Authority in the energy sector, Galp Energia was asked to provide the standard contract concluded with independent distributors of bottled LPG. The standard contract included a clause prohibiting the distributor from selling bottled LPG outside its allocated territory. On the basis of these findings, the Portuguese Competition Authority opened an ex-officio investigation into the distribution system of Galp Energia.
The in-depth investigation carried out by the Portuguese Competition Authority gathered a significant body of evidence, including the distribution contracts agreed between Galp Energia and its distributors of bottled LPG in Portugal (mainland Portugal, Azores and Madeira).
The investigation found that 199 contracts (out of 240) in mainland Portugal and all distribution contracts in Azores and Madeira do not permit passive sales outside the allocated territory of the distributor. Moreover, several distributors admitted not selling outside of their allocated territory due to instructions from Galp Energia.
Competition rules draw a distinction between active sales and passive sales. In certain circumstances, it is permitted to allow a distributor to restrict active sales (i.e. actively approaching individual customers) to a territory that has been allocated exclusively to another distributor. However, the protection of exclusively allocated territories must permit passive sales (i.e. responding to unsolicited requests from individual customers) to such territories.
Galp Energia has breached competition rules by preventing its distributors of bottled LPG from selling passively across territories in response to unsolicited requests from individual customers.
Article 9 of Law 19/2012 (the Portuguese Competition Act) and Article 101(1) TFEU prohibit agreements and concerted practices which may have as their object or effect the prevention, restriction or distortion of competition.
This Decision follows a Statement of Objections sent in May 2014 where the Portuguese Competition Authority warned Galp Energia that the partitioning of the Portuguese market of bottled LPG appeared to be in breach of competition rules.