Labor group wants DOJ to probe Petron for unfair competition

A labor group has asked the Department of Justice (DOJ) in its capacity as the appointed "competition authority" to step in and investigate oil firm Petron Corp. for practices that allegedly hamper the growth of smaller, independent rivals in the downstream oil industry. In a statement, the Trade Union Congress of the Philippines (TUCP) said Petron wants to enjoy "superior pricing power" by suppressing fair competition. "We're afraid Petron has become the new bully in the local oil markets, considering the way it has been tormenting much smaller competitors," said TUCP secretary-general Ernesto Herrera. Herrera was reacting to reports saying that Petron has blocked independent player Eastern Petroleum Corp. from launching a new "megastation" at the Subic Bay Freeport Zone. In July, Eastern Petroleum filed a “restraint of trade" complaint against Petron before the Energy Department alleging that firm violated the Oil Deregulation Law of 1998 when it blocked the establishment of the new megastation. Sought for comment, Petron merely reiterated its earlier statement regarding the matter, saying it was the Subic Bay Metropolitan Authority (SBMA) Board that approved an exclusive zone for Petron years ago. In 2003, the SBMA board reportedly decided that no other similar business may invest within an 800-meter radius from their service station as an incentive for "taking a gamble" by investing in the area early on. "Petron entered into the business venture and invested a substantial amount for a gasoline station and affiliate businesses in the area without certainty of progress and recovery," Petron claimed. The oil firm said that Eastern Petroleum was well aware of the 25-year agreement between Petron and SBMA but still continued to construct the facility, prompting Petron to file a case against the smaller oil firm. "Subic Bay has a huge area beyond the 800-meter radius of our station, which our other competitors have availed of. There is nothing that prevents Eastern or any other party from putting up service stations within SBMA beyond that 800-meter radius," it added. Abusing its market dominance TUCP stressed, however, that Petron is using its market dominance in other spaces such as the liquefied petroleum gas (LPG) market to jack up its prices and harass smaller competitors in the market. The group said Cebu Rep. Eduardo Gullas had earlier pointed out that Petron's "unusual dominance" has allowed it to sell its LPG in the Visayas and Mindanao "at prices that are 14 percent higher" than those sold in Luzon. Petron, through its acquisition of Chevron Philippines Inc.'s cooking fuel business in 2007, has emerged as the market leader in the LPG space, with around 40-percent market share after the buyout, according to newspaper reports. Additionally, Herrera assailed the move of the Federation of Philippine Industries Inc. (FPI) — of which Petron, Shell Petroleum Corp. and Chevron Philippines Inc. are members — to discredit the LPG Marketers' Association (LPG/MA) as a legitimate party list group in the House of Representatives. The FPI had earlier asked the Supreme Court to delist LPG/MA from the roster of party lists, claiming that the latter does not represent a marginalized sector as prescribed by law. Herrera described the move as a "harassment" of independent refillers that threaten the competitiveness of what is dubbed as the "Big Three" (Petron, Shell and Chevron). "It is wrongful for FPI to single out and attack LPG/MA, simply because independent LPG refillers happen to be direct business competitors of Petron, Shell and Chevron," Herrera stressed. — With JM Tuazon/VS,GMA News