Brief 33: A matter of ups and downs: the competitive assessment of fuel price dynamics 30.09.08
Whenever fuel prices increase markedly, accusations of anti-competitive conduct are almost sure to follow. Indeed, when automotive fuel prices scaled new highs during 2008, this was greeted with waves of protest around the world. Portugal was no exception, with the Automobile Club of Portugal (“the ACP”) declaring itself ?convinced? as to the anti-competitive nature of the price movements. Significantly, the Portuguese Autoridade da Concorrència (“the Authority”) responded by initiating an in-depth investigation of the sector. In turn, this prompted the ACP to follow up on its claims with a legal opinion that set out its concerns in more formal terms.
In this Brief, we use this episode to illustrate how economic analysis can help to distinguish between spurious and legitimate competition concerns. In particular, we examine the usefulness of formal econometric techniques, as deployed by the Authority, in testing competing claims.