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Blugas Ltd/bulk customers [1995] IECA 389 (10th April, 1995)
COMPETITION
AUTHORITY
Notification
No. CA/540/92E - Blugas Limited-bulk customers.
Decision
No. 389
Price:
£1.30
£1.80 including postage
Competition
Authority Decision of 10 April 1995 relating to a proceeding under Section 4 of
the Competition Act, 1991.
Notification
No. CA/540/92E - Blugas Limited-bulk customers.
Decision
No. 389
Introduction
1. Notification
was made by Blugas Limited on 30 September 1992 with a request for a
certificate under
Section 4(4) of the
Competition Act, 1991 or, in the event of
a refusal by the Competition Authority to grant a certificate, a licence under
Section 4(2) in respect of the standard agreements Blugas has with bulk
customers.
The
Facts
(a) The
subject of the notification
2. The
notification concerns a standard agreement by Blugas with its bulk LPG
customers, which provides for exclusive purchase by the customers of all of
their LPG requirements from Blugas for a period of five years.
(b) The
parties involved
3. Blugas
Limited is a recent entrant as a supplier of LPG in the State. It was
incorporated in 1987, and commenced trading two years later. The founders were
Jones Oil Ltd, Suttons Oil Ltd. (now part of the IAWS group), and Three Rivers
Oil Ltd. The founders were all involved in the oil distribution business, as
distributors of Esso products in different parts of the State.
4. The
principal activity of Blugas is the supply and distribution of LPG under the
Blugas tradename. LPG is supplied to Blugas primarily by Esso, and is
imported into Dublin and stored at the Blugas terminal in Dublin. Bulk LPG
customers include those involved in industrial processing and heating,
commercial heating, water heating and catering, agricultural/horticultural
heating, fish farming and road marking, and private households. These
customers purchase LPG for their own use. In addition, bulk LPG is supplied to
retail petrol stations who in turn supply the motorist. The distribution was
done by the three founder members, but Blugas has recently taken over the
distribution function formerly undertaken by Jones Oil. Blugas also supplies
bottled LPG through distributors to retailers who resell it to domestic
consumers and to the industrial market. The relevant agreements for LPG
dealers have been covered by the category licence (1) and those for
distributors are the subject of a separate notification.
(c) The
product and the market
5. The
characteristics of the product and the market were described at length in the
Authority's category licence for agreements with cylinder LPG dealers. Since
LPG is distributed throughout the State, the appropriate geographic market is
the State.
(d) The
notified bulk supply agreement
6. Under
the notified Blugas bulk LPG supply agreement, Blugas agrees to supply, and the
buyer agrees to purchase from Blugas for consumption at the buyer's premises,
the buyer's total requirement of LPG for a period of five years. Blugas
provides equipment for the use and storage of LPG, for which the buyer pays an
annual rental. The agreement contains provisions relating to delivery, price,
termination, indemnity, insurance and force majeure, among others.
7. The
main provisions of the agreement are as follows:
A. The
Customer hereby grants to Blugas the exclusive right to supply Liquified
Petroleum Gas (the "Product") to the Customer .....
1. Subject
to the provisions for earlier termination hereinafter set out, this Agreement
shall remain in force for a period of five years from the date of its execution.
2. The
Customer shall take delivery of the Product or procure delivery to be taken of
the Product on such days, between such hours and in loads of minimum or maximum
quantity as may from time to time be reasonably prescribed by Blugas (which
expression for the purpose of this paragraph shall be deemed to include Blugas'
agents and authorised distributors) .......... Such delivery shall be in bulk
or by cylinders, at Blugas' option, to the Premises.
3(a) Blugas
will furnish and install at the premises the equipment set out in Special
Condition 2 (the "Equipment") for the use and storage of the Product ........
The Equipment shall at all times remain the property of Blugas and the Customer
hereby consents to the maintenance of the Equipment by Blugas at the Premises
and shall allow Blugas such access as shall be reasonably required for the
purpose of such maintenance.
3(c)(i)
Subject to Clause 11(b) [interruption of supply], the Customer shall use the
Equipment at all times exclusively for the storage of Product supplied by Blugas.
10. The
Product and the Equipment supplied under this Agreement shall be for the
Customer's own use and shall not be resold. The Customer further undertakes
that the Product and the Equipment supplied under the Agreement shall not be
exchanged, adulterated, decanted, or otherwise dealt with in any way, or used
in connection with or as fuel for mechanically propelled vehicles.
The
special conditions include the place of delivery of the product, equipment
owned and installed by Blugas, price of the product, fixed annual rental for
loan and maintenance of the equipment and the fee in connection with the
commissioning and installation of the equipment.
(e) Submissions
of Blugas
8. Blugas
claimed that the bulk supply agreement did not offend against
Section 4(1) of
the Act. The overall effect of the agreement was to encourage and promote
competition by ensuring the efficient distribution of Blugas' products.
Certain provisions were necessary to ensure this ultimate objective and were
reasonable in their terms. Blugas believed that the said provisions did not
infringe
Section 4(1) of the
Competition Act. The agreement was also
pro-competitive as it involved a new entrant to a market dominated by a small
number of large companies. Blugas further submitted that the Competition
Authority adopt what has been termed under, in particular, United States, and
European Community, competition law, a "rule of reason" approach and consider
the agreement and the provisions noted to be reasonable in the context of
Section 4(1) and therefore outside the application of that provision. Blugas
referred to the judgment of the European Court of Justice in Stergios Delimitis
v. Henninger Brau, Case 234/89, 28th February, 1991, and the judgment of Mr
Justice Keane in Masterfoods Limited Trading as Mars Ireland v. HB Ice Cream
Limited, 28th May, 1992.
(a) The
Agreement involved an exclusive purchasing obligation. Such agreements led in
general to an improvement in distribution. They enabled the supplier to plan
the sales of his goods with greater precision and for a longer period and
ensured that the customer's requirements would be met on a regular basis for
the duration of the agreement. This allowed the parties to limit the risk to
them of variations in market conditions and to lower costs. These general
considerations were particularly relevant in the context of the Blugas market.
Blugas was a relatively new entrant to the LPG market. As such, Blugas needed
its standard customer network in order to enable it to compete in a market
traditionally dominated by a small number of companies with large market
shares. Further, Blugas' entry to the market had increased competition.
(b) Exclusive
purchasing agreements between suppliers and customers also allowed consumers a
fair share of the resulting benefit as they gained the advantages of regular
supply and were able to obtain the contract goods more quickly and more easily;
(c) In
general, the agreement only contained provisions which were reasonable and
necessary in order to obtain the above objectives. Blugas made the following
individual comments:-
Recital
A
this
provision was reasonable and necessary in order to guarantee the effective sale
of
Blugas' products. In addition, the customer benefited as it was guaranteed a
regular supply of LPG;
Clause
3(c)(i)
this
provision was a corollary of Recital A and was therefore reasonable for the
reasons noted above.
Clause
10
the
products were not sold for resale, the customer was not a reseller. Separate
agreements applied in relation to resale. This provision was therefore
reasonable.
(d) The
agreement would not result in a serious restriction of competition. On the
contrary, the Blugas network stimulated competition as Blugas was a relatively
new entrant in a market dominated by a small number of companies with large
market shares. In contrast Blugas' market share at 31st December 1991 was
around 4%.
10. In
response to enquiries made by the Authority, Blugas stated that the supply of
bulk LPG involved significant sunk costs on their part, for example, the cost
of transporting and installing the bulk tanks. In the case of a new customer,
this might include installing expensive pipeworking. These costs meant that
Blugas were unlikely to make any profit from a bulk agreement for the first 1.5
to 2 years (sometimes longer). They considered it reasonable that their
customers should undertake to purchase exclusively from Blugas for a certain
period of time in order that Blugas might recoup its investment and generate a
return. If a customer met the sunk costs itself, Blugas would not ask the
customer to purchase bulk LPG exclusively from Blugas. They required exclusive
use of the equipment for the storage of Blugas as Blugas owned the equipment.
They argued that it was reasonable that Blugas should ensure that their own
property was only used for certain purposes, bearing in mind the sunk and
investment costs involved. They estimated that the cost of the equipment
supplied to bulk industrial customers - tanks, installation equipment, piping,
etc - varied from £6,000 to £25,000.
(f) Submissions
by Blugas on the Flogas and Calor dealer agreements.
11. Following
the publication of the Flogas notifications (including CA/16/92E) by the
Authority, Blugas transmitted two lengthy submissions to the Authority, at the
end of July 1992, prepared by economists and lawyers respectively. These also
referred to the Calor bulk LPG agreements, which had not at that time been
notified, although they were notified subsequently (CA/154/92E and CA/155/92E).
The submissions argued, on a number of grounds, that neither a certificate nor
a licence should be granted to the Flogas or Calor dealer agreements. The
eventual notification of the Blugas bulk supply agreement showed (see para 7)
that this followed industry practice in providing for the exclusive purchase of
Blugas by the bulk customer for five years. Blugas stated that, in order to
survive, it had to employ agreements which afforded similar protection to that
which was enjoyed by its competitors. Their exclusive purchasing obligation
was simply a market reaction to the actions of competitors. Just as the
Authority has taken into account the submissions by Blugas in assessing the
Flogas and Calor bulk supply agreements, insofar as they related to the
notified agreements, so it has taken the Blugas submissions into account in
considering the bulk supply agreement notified by Blugas itself, insofar as
these are relevant.
Assessment
Applicability
of Section 4(1)
12.
Section
4(1) of the
Competition Act, 1991 prohibits and renders void all agreements
between undertakings which have as their object or effect the prevention,
restriction or distortion of competition in trade in any goods or services in
the State or in any part of the State.
(i) Agreements
between undertakings
13. According
to
Section 3(1) of
the Act, 'undertaking means a person being a body corporate
or an unincorporated body of persons engaged for gain in the production, supply
or distribution of goods or the provision of a service.' Blugas is an
incorporated body engaged for gain in the supply and distribution of LPG, both
to resellers and to final consumers. Accordingly, Blugas is an undertaking
within the meaning of
the Act. Bulk customers are not resellers of the
product but consume it themselves. A number of the bulk customers are engaged
in the production, supply or distribution of other goods, or the provision of
services, for gain, being engaged in farming, manufacturing, retail trade,
catering, motor service stations, and so on. These customers are also
undertakings within the meaning of
the Act. A number of bulk customers may not
come within the definition of an undertaking and supply agreements with them
are not therefore covered by
the Act. This decision does not apply to such
agreements. With the exception of these agreements, the notified agreements
are agreements between undertakings within the meaning of
Section 4(1) of the
Act.
(ii)
The bulk supply agreement.
14. The
bulk supply agreement provides that the customer shall purchase from Blugas his
total requirements of LPG. The agreement has a term of five years, but may be
renewed. It also provides that equipment supplied by Blugas shall be used
exclusively for the storage of Blugas. The agreements apply to exclusive
purchase of LPG in cylinders as well as to bulk supplies of LPG.
15. For
the duration of the agreement, the customer can only purchase LPG from Blugas,
and from no other supplier, and no other supplier can sell the product to the
customer. This limits the commercial freedom of the customer to buy LPG from
any source he wishes, and the ability of others to supply him, and denies him
supplies unless he accepts the exclusive purchase requirement. While each
individual agreement might have relatively little effect upon competition, all
the agreements together form a network of restrictive agreements for the
distribution of Blugas to bulk customers. This is reinforced since Calor and
Flogas also have similar exclusive purchase agreements, thus forming a
restrictive system of distribution in the LPG market as a whole. No customer
can purchase LPG from anyone other than the exclusive supplier for a relatively
long period of time. This tends to introduce a considerable degree of rigidity
into the market, and it makes it difficult for a new entrant to enter the
market quickly on any significant scale since a large number of potential
customers, including many large users, are not available, at least until their
exclusive agreements have expired. The Authority considers, therefore, that
the standard Blugas bulk supply agreement has the object and the effect of
preventing, restricting or distorting competition in goods in the State, and
thus it offends against
Section 4(1).
16. Clause
3(c)(i) of the agreement provides that the equipment supplied, which is the
property of Blugas, shall be used exclusively for the storage of Blugas. The
customer must pay for the installation and maintenance of the storage
equipment, usually a pressurised bulk storage tank, but Blugas is entitled to
remove it on termination of the agreement. The views of the Authority in
respect of exclusive use of equipment requirements which represent exclusive
purchasing obligations have been given in its decision on certain Burmah
Castrol agreements (2).
17. In
the present case, the requirement that the equipment only be used for the
storage of Blugas, while it means that it cannot be used for the products of
competitors, does not in itself have the object or effect that the customer
must purchase LPG exclusively from Blugas. The customer is already subject to
an exclusive purchasing provision. Its purpose is to prevent competitors from
securing a 'free ride' in the costly equipment which has been supplied by
Blugas, thus giving them a competitive advantage. There would usually be space
in the customer's premises for the installation of a competitor's storage tank,
or, they could purchase cylinder gas from another supplier. While this might
be less convenient, it does not, of itself, prevent the customer from buying
from suppliers other than Blugas, it does not have the effect of representing
an exclusive purchasing agreement, and the requirement does not offend against
Section 4(1). In the circumstances, the Authority does not consider it
necessary to deal with the Mars v H B judgment (3), which concerns exclusive
use of equipment.
18. In
arguing for a certificate, Blugas submitted that the Authority should adopt a
'rule of reason' approach and consider the agreements to be reasonable in the
context of
Section 4(1), and outside the scope of the section. They also
referred to the EU judgment in Delimitis v Henniger Brau.
19. The
Authority adopts a rule of reason approach to every agreement notified to it.
Section 4(1) prohibits anti-competitive agreements generally, and it gives some
specific examples of these. The Authority noted in its very first decision,
however, that
Section 4(1) could not be interpreted literally since it would
mean that virtually every form of business agreement could be considered
offensive. This does not mean that an anti-competitive agreement could be
regarded as inoffensive because the parties consider it to be 'reasonable'.
The Authority does not believe that
Section 4(1) can be interpreted in that way.
20. Blugas
did not make clear the precise aspect of the Delimitis v Henniger Brau judgment
(4) which it wished the Authority to consider. That agreement related to
exclusive purchase for resale. Nevertheless, the Authority can state that it
agrees with the judgment of the EU Court of Justice that an exclusive
purchasing agreement must be considered in its economic and legal context, and
as part of a network of such agreements by one supplier, and as part of a
series of networks of several suppliers, as part of its overall assessment. It
notes the view of the Court that access to the market or increasing market
share by competitors must be made difficult, because of the cumulative nature
of such agreements, and that the agreement in question must make a significant
contribution to the sealing-off effect produced by the totality of these
agreements, in order for Article 85(1) to be applicable. Following this
judgment, the EC Commission modified the notice concerning Regulations 1983/83
and 1984/83 by providing that beer supply agreements would not fall under
Article 85(1) if, in particular, the market share of the individual brewer did
not exceed more than 1 per cent of the national market for the resale of beer
in on-licensed premises (5). The Authority believes that the criteria set out
by the Court in Delimitis and the Commission in the notice on beer supply
agreements are appropriate for considering whether or not the Blugas agreements
should be regarded as offending against
Section 4(1). It is clear that the
individual Blugas agreement is part of a network of agreements between Blugas
and a number of bulk purchasers of LPG. In addition other bulk purchasers of
LPG have similar exclusive purchase contracts with other suppliers. The
cumulative nature of these agreements makes it difficult for other firms to
gain access to the market or to increase their market share, since, at any
given time, many potential customers are committed to purchase exclusively from
one supplier. It is clear that Blugas has a market share considerably higher
than 1%, and that the three main suppliers - Calor, Flogas and Blugas - who
operate exclusive purchasing systems, account for around 99% of the market for
LPG. It would in any case be invidious and discriminatory for the Authority to
treat Blugas, even though it is a relatively new entrant to the market, in a
fashion different from the incumbent firms.
21. The
Authority considers that the other clauses in the notified agreement do not
offend against
Section 4(1) of
the Act. In particular, clause 10 provides that
the product and equipment shall be for the buyer's own use and shall not be
resold, exchanged, adulterated, decanted, or otherwise dealt with in any way.
Since the agreement is specifically with the final consumer, and for reasons of
safety, the Authority does not regard these requirements as offending against
Section 4(1). Clause 10 also limits use of the product in motor vehicles. This
is essentially for safety reasons, and is not considered to offend against
Section 4(1). Clause 2 requires the customer to take delivery at times and in
quantities as may be reasonably required by Blugas. These are required to
ensure the efficient distribution of the products, and the Authority does not
consider that they offend against
Section 4(1).
Applicability
of Section 4(2)
22. Under
Section 4(2), the Competition Authority may grant a licence in the case of any
agreement or category of agreements which, 'having regard to all relevant
market conditions,
contributes
to improving the production of goods or provision of services or to promoting
technical or economic progress, while allowing consumers a fair share of the
resulting benefit and which does not -
(i) impose
on the undertakings concerned terms which are not indispensable to the
attainment of those objectives;
(ii) afford
undertakings the possibility of eliminating competition in respect of a
substantial part of the products or services in question.'
23. In
the opinion of the Authority, the bulk LPG supply agreement notified by Blugas
fulfils the conditions provided for in
Section 4(2).
24. The
Authority is aware that LPG is volatile and can be dangerous, and that safety
considerations are of great importance, often being laid down by statute. In
addition, the supplier provides pressurised equipment, particularly storage
tanks, for bulk customers. These features are not sufficient, however, to
persuade the Authority that any exceptional treatment can be justified for the
supply of bulk LPG to customers.
(i) Improvements
in distribution, etc.
25. The
Blugas bulk supply agreement produces an appreciable improvement in
distribution. It enables the supplier, who distributes bulk LPG direct usually
to a specialised pressure storage tank on the premises of the customer, to plan
the sales of his goods with greater precision and for a longer period, and to
justify the investment in costly storage and distribution equipment. It
ensures that the customer's requirements will be met on a regular basis for the
duration of the agreement. It permits a reduction in distribution costs,
compared to a situation where the customer purchased less frequently from two
or more suppliers of LPG, for each of which he would need a separate storage
tank. These benefits apply to over half of LPG purchased in the State, the
remainder being accounted for by retail sales of cylinder LPG. The agreement
also contributes to technical progress by virtue of adherence to safety
standards and the provision of technical advice.
(ii) Share
of benefits to consumers.
26. In
the Authority's view, the term consumers refers to the users of a product, who,
in the present case, are bulk customers. Such customers gain a fair share of
the benefits by being assured of regular supplies of LPG. This is especially
important to customers who wish to use gas but who are not adjacent to the
natural gas grid. Being generally fairly large purchasers, certainly larger
than domestic consumers, they are able to use their buying power to secure some
of the benefits of reduced distribution costs in their purchase prices for LPG.
They also benefit from the fact that they do not need to invest in the
essential pressurised storage equipment, which is not needed for other fuels,
but they are charged a rental which does not represent the full cost of buying
and maintaining the equipment, though this cost is probably recovered over time
in the price of the LPG. Customers also benefit from the continuing attention
to safety, by way of technical advice and safety support services.
(iii) Indispensability
of the arrangements
27. There
are special circumstances in the supply and distribution of LPG, where
expensive storage equipment is required and is supplied by Blugas, and where
safety factors are important. Since the Blugas equipment may be restricted to
LPG from Blugas only, the benefits of the savings in distribution costs would
not be obtained if the exclusive purchasing obligation was not imposed, and if
one or more other LPG suppliers could also instal tanks and supply their brand
of LPG. The exclusive purchasing obligation, in this situation, is considered
to be indispensable in securing the benefits outlined above. (The Authority
does not believe that exclusive purchasing obligations generally upon end-users
or final customers could be justified except in special circumstances). The
maximum five-year period of the agreement is justified by the size of the
investment made by Blugas. These customers are generally located away from the
national gas grid, and tend to be smaller than the major users of gas, which
are located close to the natural gas grid. The Authority, however, would not
regard a period for exclusive purchase of longer than five years as
indispensable to secure the above benefits.
(iv) Elimination
of competition
28. Given
the structure of the LPG industry, the Authority considered carefully whether
the exclusive purchasing system represented a significant barrier to entry
which could result in the foreclosure of new entrants. The long-established
firms, Calor and Flogas, have a combined market share of over 90%. Between
them, they have exclusive purchase agreements with almost
[
] bulk customers, excluding domestic consumers. Not surprisingly, these
customers include those which regard gas as an essential fuel, but which do not
have access to natural gas, though they are few in number. Establishment of a
presence in the market as a supplier of LPG is an expensive operation.
Nevertheless, in spite of the fact that the LPG market has been dominated by
only one or two firms since its establishment nearly 60 years ago, the
Authority considers that the following facts are also relevant:
(a) while
several thousand customers in total are bound to purchase exclusively from one
supplier for up to five years, there are a large number of other potential
customers available to a new entrant for the supply of LPG;
(b) it
might be expected that, on average, up to 20% of the tied agreements expire
every year, and these customers are free to sign a new agreement with the
existing supplier or with another supplier;
(c) the
industry has been marked by the occasional successful entry of new suppliers,
such as Ergas in 1971, Flogas in 1978, Tervas in 1987 and Blugas itself in
1990. Although Ergas ceased to exist as a supplier independent of Flogas in
1989, Blugas does appear to have built up a network of bulk customers and to
have achieved a not insignificant market share in a relatively short period.
The
Authority concludes, therefore, that, while the existence of networks of tied
customers with exclusive purchasing agreements might make it more difficult to
enter the LPG market than in the absence of such arrangements, access to the
market is not entirely ruled out, and the exclusive purchasing systems do not
operate to foreclose new entry. At the same time, the establishment of a large
exclusive customer network by Blugas, in addition to those of Flogas and Calor,
would make it more difficult for another supplier to enter the market than it
has been for Blugas to enter.
29. As
already noted, customers should be powerful enough to ensure that they were not
paying excessive prices for Blugas LPG compared to that from a competitor. In
addition, it is always possible for customers to use another fuel in
alternative equipment with relatively little delay, and to cease purchasing LPG
entirely. There is thus no possibility of eliminating competition in respect
of a substantial part of the products in question as a result of the notified
agreement.
30. While
the above consideration of the requirements of
Section 4(2) has related
primarily to the supply of LPG to bulk storage tanks, the Authority considers
that it is equally applicable in the case of supply in cylinder form, even
where the cylinders are obtained from distributors or dealers and not directly
from Blugas. Furthermore, a customer which obtains cylinder LPG has the option
of obtaining the cylinders from dealers directly rather than under the
industrial LPG agreement.
31. The
Authority has decided to grant a licence in this case to agreements which
involve the exclusive purchase of bulk LPG for a period of up to five years,
whereas in the LPG dealer category licence it only permitted exclusive
purchasing agreements provided that these did not exceed two years in duration
(6). This is because the Authority considers that the market conditions differ
between the two situations. In particular, the dealer agreements resulted in
the tying of a large proportion of all available retail outlets, which is not
the case with the bulk LPG agreements.
EU
Precedents
32. In
its assessment, the Authority has had regard to the approach adopted by the EU
Commission to exclusive purchasing agreements, particularly those where the
product is to be used in the production of another product, rather than for
resale. In its Seventh Report on Competition Policy (7), the Commission stated:
(a) 'Exclusive
purchasing agreements may endanger competition, because they limit the
purchaser's freedom of choice and therefore at least potentially restrict the
sales outlets open to other suppliers.' (p. 21).
(b) 'The
applicability of Article 85(1) to exclusive purchasing and other such
arrangements depends on whether or not the arrangement, either alone or in
conjunction with other similar arrangements between the same or different
firms, may appreciably affect entry to the market and sales by third parties.'
(p. 23).
(c) 'The
Commission considers that exclusive purchasing agreements can contribute to
improving the production and distribution of goods, because they make it
possible for the parties to the agreement to plan their production and sales
more precisely and over a longer period, to limit the risk of market
fluctuation and to lower the cost of production, storage and marketing.' (p. 23).
(d) 'However,
exemption can only be given where the firms involved do not retain the whole of
the benefit. Consumers must be allowed their fair share as well. The benefits
must also be great enough to balance out the restrictions of competition they
bring with them. These tests are not satisfied if the exclusive arrangements
make it more difficult for other firms to sell on the market, and especially if
they raise barriers to market entry.' (p. 24).
The
Decision
33. Blugas
and their industrial customers are undertakings within the meaning of the
Competition Act. The bulk LPG supply agreement is an agreement between
undertakings. Because of the exclusive purchasing requirement in the
agreement, it offends against
Section 4(1) of
the Act. Nevertheless, the
Authority is of the opinion that all the conditions set out in
Section 4(2) of
the
Competition Act have been fulfilled in respect of the agreement.
34. The
Authority therefore grants a licence under
Section 4(2) in respect of the
notified standard Blugas bulk LPG supply agreement.
35. The
licence shall apply from the date of this decision, that is 10 April 1995. It
appears appropriate that the period specified for the licence should be ten
years, that is until 9 April 2005.
36. Under
Section 8(1) of the
Competition Act, the Authority may grant a licence subject
to such conditions as may be attached to and specified in the licence. Given
the very large market share possessed by Flogas and Calor, the Authority
considers that it is necessary to monitor developments in the market for bulk
LPG in order to ensure that the conditions of
Section 4(2) continue to be
satisfied. Accordingly, the licence is issued subject to the following
reporting conditions: that Blugas, every year before the end of April, submit
to the Authority the following information:
(a) the
total number of industrial LPG agreements (that is non-domestic bulk supply
agreements) in operation at the end of the preceding year; and
(b) the
total volume of sales, in tonnes, of industrial LPG to those customers in the
preceding year.
The
first of these reports, however, shall be submitted before the end of May 1995.
The
Licence
37. The
Authority therefore grants the following licence to the agreement notified by
Blugas:
Article
1
The
Competition Authority grants a licence to the standard Blugas bulk LPG supply
agreement notified to the Competition Authority on 30 September 1992
(CA/540/92E), insofar as the buyers are undertakings within the meaning of
Section 3(1) of the
Competition Act, 1991, on the grounds that, in the opinion
of the Authority, all the conditions of
Section 4(2) of the
Competition Act
have been fulfilled. This licence shall apply from 10 April 1995 to 19 April
2005.
Article
2
Blugas
shall every year before the end of April, send a report to the Authority
covering the preceding year. The first of these reports, however, shall be
submitted before the end of May 1995. The reports shall contain the following
information:
(a) the
total number of industrial LPG agreements (that is non-domestic bulk supply
agreements) in operation at the end of the preceding year; and
(b) the
total volume of sales, in tonnes, of industrial LPG to those customers in the
preceding year.
For
the Competition Authority
Patrick
M. Lyons
Chairman.
10
April 1995.
Notes
1. Decision
No. 364 of 28 October 1994.
2. Decision
No. 361 of 13 October 1994
3. The
High Court. Cases between Masterfoods Limited trading as Mars Ireland and H.B.
Ice-Cream Limited, and between H.B. Ice Cream Limited and Masterfoods Limited
trading as Mars Ireland. Judgment of Keane J., delivered on 28 May 1992 (not
yet reported).
4. Decision
of the Court of Justice of 28 February 1991 in the case of Stergios Delimitis v
Henniger Brau A.G. [1991] ECR 1-935.
5. Commission
notice modifying the notice concerning Regulations No. 1983/83 and No. 1984/83.
OJ C121, 13.5.92, p. 2.
6. Op.cit.
7. EC
Commission, Seventh Report on Competition Policy, 1977, Brussels, Luxembourg,
April 1978.
© 1995 Irish Competition Authority
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