The Competition Commission has published terms of reference for a market inquiry into the liquid petroleum gas (LPG) market. The Commission has identified a number of factors affecting the LPG market that, in its view, may adversely affect competition in the market. These include:
- Limited domestic supply which is likely to confer substantial market power on major resellers.
- High switching costs making it difficult for customers to switch suppliers.
- The regulatory environment which discourages switching between major resellers.
- LPG having been identified as a strategic energy source.
The market inquiry is expected to commence in June 2014 and likely to be completed by October 2015. It is expected to be conducted in three phases:
- Evidence gathering/investigation.
- Competition assessment.
- Recommendations and engagement with stakeholders to implement remedies to improve competition.
The inquiry is anticipated to affect all participants in the LPG market, from refineries to retailers, through wholesalers and resellers to retailers, with a view to identifying and preventing anti-competitive practices.