Independent oil players mull legal action vs Big 3

The Independent Philippine Petroleum Companies Association (IPPCA) is considering the filing of charges this week against the three major oil companies-Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex Philippines Inc. – for allegedly engaging in "predatory pricing."

"The nationwide rollback on diesel just to appease the transport group is running counter to the whole purpose of deregulation. We are looking at the legal aspect of this. We will hire lawyers to look at this matter closely," IPPCA chairman Fernando Martinez said.

"If we find out that these oil firms are underselling or selling below their landed cost, we will call the attention of the Department of Energy and Department of Justice for a possible violation of the Oil Deregulation Act," he said.

According to IPPCA chairman, the alleged predatory pricing of the three firms is "killing" the new oil players.

"That is why there is a limit under the law, they should not go beyond the marginal cost. This is quite disturbing for the new players who will be greatly affected by this move by the said oil firms. This may be a move not to cut profits but to deliberately kill competition. If we will not be able to compete then cartel and monopoly will be back in the market," he said.

Martinez noted that Petron, Caltex and Shell have 3,000 retail stations all over the country as against the 500 of the new oil players.

IPPCA is a group of 12 companies engaged in the trading and retailing of fuel and other petroleum products.

At the same time, the independent oil players said they are looking at jacking up the prices of their gasoline products by P1.20 per liter in the latter part of this month.

"We are planning to raise our prices by P1.20 per liter by the third or fourth week of this month," Flying V spokesman Macky Lopez said.

Lopez noted that the benchmark price using Mean of Platts Singapore (MOPS) has steadily increased from $30 per barrel in October 2003 to $40-$45 per barrel in February 2004.

The Flying V official added that the projected increase in gasoline has not even factored in the depreciation of the peso against the US dollar.

"We have been suffering from huge under-recoveries for the past four months. The recent 30 centavo per liter increase was not enough to cover for these foregone revenues," he said. "We have no control over MOPS prices," Lopez said.