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Royal Dutch Shell Plc .com: BP under fire as Competition Commission targets LPG market

Terry Macalister
Friday June 30, 2006
From The Guardian

BP found itself under fire again yesterday when a raft of initiatives were announced to crack down on suppliers of liquefied petroleum gas.

The Competition Commission said its final report supported provisional findings that “competition is not working as well as it should be in this market, and that LPG consumers are losing out as a result”.

The judgment comes less than 24 hours after BP faced a civil lawsuit from a US regulator over allegations of price manipulation in the propane sector.

The commission said the LPG market was a lifeline for 150,000 mainly rural customers who use the fuel for household heating, cooking and hot water. Most used it because they did not have access to a mains gas network and were paying average bills of about £800 a year. But it was difficult to change suppliers because tanks were often provided by the suppliers, who took them away if the customer switched.

Peter Freeman, the commission chairman, said: “We will be introducing measures to enable tank transfer when customers switch, improve the terms of customer contracts and give customers better information.” Many homeowners were unaware they could switch suppliers and found it difficult to find out prices offered by different companies.

More than 90% of the LPG market is held by a small number of firms: BP, Shell, Calor – owned by the Dutch group SHV – and Flogas, controlled by DCC of Ireland.

BP said it had participated fully in the review, accepted the commission’s findings and welcomed measures to make the LPG market more transparent. But Calor questioned some of the conclusions. “The truth, as acknowledged by the commission, is that customer satisfaction with LPG suppliers is high,” it said.

Commenting on BP’s wider problems, a spokesman at its London head office said: “They are clearly in separate parts of the business and in different time-frames. All we can say is, we try to run our business to be as efficient and effective as we can.”

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