OREANDA-NEWS.  June 27, 2014. Deputy Head of the Federal Antimonopoly Service (FAS Russia), Anatoly Golomolzin, delivered a Report “On the State of Competition and Pricing on the Market of Oil and Oil Products” at the 62nd session of the Economic Council of the Commonwealth of Independent States (CIS).

Traditionally, the Headquarters for Antimonopoly Investigations at the Interstate Council on Antimonopoly Policy (ICAP) focuses of the issues within the CIS (air transportation, roaming), and successfully resolves them in cooperation with the CIS Executive Committee and other sectoral Councils. According to Anatoly Golomolzin, the total growth of passenger air transportation since 2008, when a report was presented at the Council of the Heads of CIS Governments as part of joint efforts with the Aviation Council and the Interstate Aviation Committee (IAC), was 2.3 times. After that report, in 2010 prices in roaming reduced by up to 9 times for voice-over, for SMS – by up to three times and for Internet – by up to 44 times, and the scope of services increased by 2-10 times (voice, SMS, the Internet), owing to which providers’ revenues consistently demonstrate slight growth. “In the near future, on 15-16 July 2014, in Astana, the 49th session of the Council of the Heads of Communication Authorities of the Regional Communications Commonwealth (RCC) will discuss further reduction of tariffs and implementing decisions of the Council of the Heads of Governments. These activities invariably encourages building of trust towards CIS institutions”, stated Anatoly Golomolzin.

The work on the market of oil products required additions to the format of cooperation between the antimonopoly bodies. Upon a FAS initiative, an International Working Group (IWG) was formed comprising representatives of 20 countries. Along with the CIS, members of the Working Group include Austria, Germany, Portugal, the USA and other countries.

Under the framework of joint efforts, exchanging information on the procedures of analyzing markets (typically, oligopolistic), practice of investigating case on violating the antimonopoly law, monitoring of wholesale and retail prices take place on a regular basis. The common platform for exchanging confidential information on the issues was formed. Specialists from the antimonopoly bodies have access to the platform, which increases the quality of work.

In 2013, OECD and UNCTAD highly commended the results of the efforts of IWG. At the 14th session of UNCTAD (7-11 July 2014) there will be consultations on integrating IWG platform with the UN database on antimonopoly cases.

A IWG session in London (http://www.fas.gov.ru/fas-news/fas-news_33521.html) focused on the problems of setting global prices for oil and oil products. IWG members visited offices of the leading world platforms of Platts, Argus, and ICE. The antimonopoly officers had questions about the procedures of forming price quotations for oil and oil products. “IWG were not surprised that the EU started an investigation with regard to an international agency and several oil companies and traders”, said Anatoly Golomolzin.

It was necessary to outline the avenues for resolving the problems. In 2008 G-20, concerned about possible manipulations with prices for oil products, requested the International Organization of Securities Commissions (IOSCO) to look into the situation. IOSCO works with derivatives markets (derivative financial instruments), including oil futures and options. Earlier, similar efforts were undertaken by IOSCO to stop manipulating LIBOR rates. In their turn, antimonopoly bodies proceeded from the results of investigations on the spot market. The situation deteriorated during “gasoline crisis” in 2008-2010. Here the positions of financial markets regulators were in line with the position of the antimonopoly authority.

One of the reasons of the problems on the market of oil products could be price manipulation due to non-transparent pricing by global agencies. The entire system of global pricing in exchange as well as non-exchange segments is built on prices indices published by two private agencies according to their rules. Antimonopoly and financial regulators are concerned with the internal and external control procedures, non-representative samples of reported transactions, etc.

“Our practice is considerably better”, thinks Anatoly Golomolzin. “Indices of exchange and off-exchange prices are formed and published in accordance with the antimonopoly standards and the Law on organized trading. In 2013 over 13 million tons of oil products were sold through exchange, including nearly 0.5 million tons from oil refineries of the Republic of Belarus. We are discussing development of exchange trading with the antimonopoly authorities of other CIS countries. There is also mutual understanding with exchange community”.

“If global agencies use the procedures of selected “reporting” of transaction prices, we apply the procedure of registering real transactions in total exceeding 70 million tons – the volumes a lot larger than used by the global agencies”, emphasized Anatoly Golomolzin.

The interested ministries and bodies of the CIS member-states and sectoral cooperation agencies should take into account the results of the completed work in further development of the market of oil and oil products, and improving its regulation, paying special attention to advancing exchange trading as well as the mechanisms of registering of-exchange transactions. ICAP CIS shall continue efforts in this area together with the national antimonopoly authorities and the authorized bodies regulating this sector.

Members of the CIS Economic Council approved the Report “On the State of Competition and Pricing on the Markets of Oil and Oil Products”. The Report will be further considered by the Council of the Heads of CIS Governments in November 2014 in Ashkhabad.