Competition amongst distributors is not unfair

The price cap announced by Eni, which IP and Q8 have followed suit with, has understandably provoked the anger of independent operators: having to purchase fuel on wholesale markets where no concessions are available, they find themselves unable to match the prices set by vertically integrated companies. They are right to say that there is an element of injustice in this situation; but sometimes life itself is unfair. In recent years, the so-called ‘white pumps’ have played a vital role in shaking up the rigid structure of the fuel distribution sector. By entering the market, they have disrupted established balances and challenged a decades-long monopoly: so much so that Italian prices, which historically were higher than the European average even after tax, are now lower when the tax component is excluded. Today they find themselves in a difficult position because, if they were to drop to Eni’s price cap levels, they would end up operating at a loss without being able to offset this with profits from other stages of the supply chain. But this does not mean they are doomed – quite the contrary.

Competition is not just about price: it is also about innovation and service. And it is likely that the current economic climate will open up potentially new scenarios. Yesterday’s newspapers showed the rush on Eni petrol stations, with long queues to fill up and stocks running low. This suggests that, alongside those customers for whom saving money is more important than the time spent waiting or searching for a station that is still open, there are others willing to spend a little more to skip the queue. In a sense, the move implemented by Eni, Ip and Q8 splits the market in two: those who value time more highly and those who prefer to minimise their expenditure. Competition demands ingenuity and dynamism; it is almost never kind to those who fail to grasp changes or keep pace. The initiative of a voluntary price cap on retail prices is a response to extraordinary circumstances: even independent operators must understand the reasons behind it and, if they cannot beat the multinationals at their own game, seek a different competitive edge.