Free markets should be the best allies of hard-pressed consumers. The EU is a champion of competition because its wants to promote the benefits that a free market economy normally gets for consumers. But in Malta things do not work out quite as they do in other free market economies.
The retail fuel market was officially liberalised only recently with a few private fuel importers and suppliers taking on the might of Enemalta, which, since the 1970s, has been the sole supplier of fuel for the retail market.
Late in January, the first positive effects for consumers buying diesel for their cars began to be announced. A Rabat fuel station owned by M&N Camilleri marked down its price for diesel to €1.33 – a discount of 2c per litre. However, this tiny bonanza for motorists did not last long. The wholesale supplier of fuel, the Falzon Group, ‘pressured’ the Rabat fuel station to withdraw the offer to sell diesel at a discounted price.
The frustrated owner of the fuel station said he was “warned that the increased profit margin given to us by the suppliers in January would be withdrawn, forcing me to put the price back up at €1.35”. The only people who are even more frustrated than the petrol station owner are the thousands of motorists who are fed up with the lack of transparency in the way fuel prices are fixed. Cynics would say that in Malta we do things differently.
Those who expected the competition regulator, whose main function is to protect consumers, to act swiftly to safeguard their interests now face a wall of bureaucracy that may keep the benefits of competition from reaching them. The Malta Competition and Consumers Affairs Authority alarmingly claimed that the probe in fuel prices “is proving to be very complex”.
No reason was given for this ‘complexity’. Some consumers understandably concluded that this is yet another case of pompous bureaucracy where small consumers still end up short-changed by suppliers of goods and services that enjoy a dominant position in a small market. When consumer watchdogs fail to give reasonable explanations in the shortest possible time as to why suppliers are allegedly not letting consumers benefit from the dynamics of completion, speculation starts to crop up as to why consumers are not treated fairly.
One question that some business analysts are asking is whether the imminent privatisation of Enemed has anything to do with the delays of MCCA to come out with a clear judgment as to why drivers are being short changed by what appears to be a cartel arrangement involving suppliers and fuel stations.
The Falzon Group insists “that fuel stations are free to set their own prices”. So why this lack of transparency in explaining to the public what makes this supplier tell the fuel station in Rabat not to break ranks with the other fuel suppliers who all charge the same price for fuel?
Competition could hurt the pockets of fuel retailers. But it could also reduce the profits of Enemed in the run-up to its privatisation. This would hurt Enemalta that, undoubtedly, wants to maximise its profits. Could this be an explanation behind the regulator’s apparent dragging of feet to decide what should be a fairly simple issue that is now being interpreted as a complex conundrum?
Consumers are entitled to the full benefits of a transparent and free fuel market.