The present door-to-door gas distribution system based on territorial exclusivity will be retained, according to proposals to restructure the LPG market sector.
In a document issued for public consultation, the Malta Resources Authority said the proposals followed a Government decision to declare the door-to-door selling of liquefied petroleum gas in cylinders to be a service of general economic interest under the Competition Act.
In what seems like a slap in the face for the main market player, Liquigas, the MRA proposed those authorised to distribute LPG cylinders door to door could not also be allowed to import, store or bottle LPG.
Such a proposal would not suit the other player, Easygas, which has its own delivery trucks as well.
It is not legally possible for distributors to retain geographical exclusivity
Liquigas rejected the proposal, saying it will defend its right to retain the cylinder distribution licence covering all Malta that was issued by the resources authority.
The company said the licence was a pre-requisite for the €25 million investment in the building and operation of a new LPG facility in Bengħisa.
The MRA proposed to issue “a limited number” of authorisations for the distribution of gas, each of which would have its own territorial exclusivity. There are about 23 independent distributors at present.
It also proposed that door-to-door retail authorisations would be subject to a number of conditions, including a multi-flag system whereby distributors sold cylinders from any gas provider so consumers would have a wider choice.
Moreover, the authorised sellers will be required to operate a 24-hour call centre and offer emergency services.
Liquigas is insisting that the model proposed by the MRA went against “the ideal model” for consumers, which includes various distribution streams, each competing to deliver the best service possible.
The company has a direct distribution system requiring customers to phone the Liquigas call centre order the cylinders to be delivered at a convenient time.
Liquigas has repeatedly insisted on being granted permission to operate its own distribution system.
The distributors, who are separate from Liquigas, had signed an agreement with Enemalta back in 1992 to distribute cylinders by territory. However, Liquigas says the agreement had been declared null and void by the Office for Fair Competition, something the distributors deny.
“It is not legally possible for distributors to retain geographical exclusivity as this is in conflict with Maltese competition law and also with EU rules, which specifically prohibit cartels and other agreements that could disrupt unhindered competition and free choice in the EU market,” Liquigas said in a statement released earlier this week.
The distributors, however, insist that the agreement was still valid, adding that when Liquigas entered the market in 2008, “an efficient distribution system” had been in place for more than 40 years.
In its proposals, the MRA said it agreed with having a uniform price of gas throughout Malta and Gozo and suggested regulating fixed-point sale of gas so that “they would complement rather than substitute door-to-door distribution”.
The MRA is receiving comments on its proposals until December 6 via e-mail at mra@mra.org.mt or at MRA, Millennia, Second Floor, Aldo Moro Street, Marsa.