Consumer Fact Sheet on Gasoline Prices

May 7, 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. In particular, the examination focuses on whether the price increases result 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.

The Competition Bureau has received a large volume of complaints from consumers and independent retailers regarding retail gasoline prices. The Bureau responds to every complaint and information request either by letter or by a telephone call from an investigator depending on the circumstances.

The Bureau is obtaining data to track pricing trends and will obtain and analyse information from both 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 recent rapid increase in the price of retail gasoline is due to anti-competitive conduct or to other factors.

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:www.cb-bc.gc.ca

May 2004