The Competition Authority’s concerns regarding Eni’s fuel price cuts

There is one detail in Eni’s decision to cap the price of petrol and diesel that risks going unnoticed. And it is probably the most interesting from a competition perspective. Eni has publicly announced the maximum price charged by its network: 1.99 euros per litre for petrol and 2.19 for diesel, for at least thirty days and, perhaps, until the end of the year. IP followed suit, announcing that it too would ‘gradually’ introduce a price cap, though without specifying the level for the time being. In the past, the Italian Competition and Market Authority (AGCM) has always regarded this type of public statement as problematic for competition. What will it do this time?

The precedents are instructive and, taken together, consistent. In 2007, the Competition Authority accused the major oil companies of possible coordination of recommended prices: the regular announcements of prices could have facilitated parallel pricing. The proceedings concluded with commitments which included, amongst other things, the cessation of the publication of recommended prices. In 2016, it launched an investigation into motor insurance, prompted precisely by public statements from the major companies regarding future pricing strategies: such announcements, the Antitrust Authority wrote, could be indicative of a collusive agreement. More recently, in 2023, it conducted proceedings against oil companies over an alleged agreement regarding the biofuel component of motor fuels, which was said to have been implemented precisely through the publication of its value by Eni and others.

These cases have had different outcomes; the most recent one is the subject of litigation. To be honest, the Authority’s reasoning is not always convincing, because price parallels can have various explanations. However, the Competition Authority has typically jumped straight to the conclusion of collusion, relying on any form of information exchange. Here, the situation goes beyond the exchange of information: the market leader has publicly set a maximum price; another major operator has announced that it will do the same. So, what will the Authority do? The difference compared with previous cases is, of course, substantial: here, a price cap is being announced rather than a price increase, and this is being done as a commitment to consumers, not with an intention effectively directed at competitors. And a lower price is, in the short term, good news for motorists. But the information mechanism is not all that different: a firm makes it known to everyone, including competitors, what price it does not intend to exceed; a competitor responds by announcing a similar cap. Others may follow suit, with or without public statements. And the literature is full of ‘caps’ that become ‘targets’.

The question, therefore, is simple: will the Competition Authority have the courage to shine a light on this? In fact, it is one of two things: either it remains consistent with its track record and the principles it has consistently reaffirmed, treating the announcement – and even more so the competitor’s response – as matters warranting further investigation; or it turns a blind eye to one of the most glaring cases of public price announcement in recent years. Above all, if the outcome were to be as the government hopes – namely, a realignment of prices around the stated level – Piazza Verdi would have few alternatives, unless it were to disavow the line it has followed thus far.

This time, the issue is not about price levels. It is a question of whether competition rules apply equally when challenging a price rise – which, incidentally, has not always been proven – and when announcements, at least in the short term, save motorists money, are welcomed by the government and garner public support. And what will happen when wholesale prices fall, and the companies’ prices have settled at around the same level? The Competition Authority has argued, on several occasions, that transparency can become a tool for coordination amongst competitors. It now has a concrete case to demonstrate the value of that principle: will it sacrifice popularity for the sake of consistency, or vice versa, at the risk of undermining the credibility of its previous analyses?