A POWERFUL watchdog has provoked fury in Shetland by dropping a probe into the local fuel market – but could strike a deal to help cut prices on the Western Isles.
The Office of Fair Trading (OFT) announced yesterday that it was abandoning its investigation into alleged market abuses in Shetland by GB Oils, now Certas Energy.
At the same time, it said it would consult on whether to accept the firm’s own proposals to loosen its grip on the petrol and diesel market in the Hebrides.
The move – which follows a 14-month investigation – would terminate contracts which require many filling stations on the islands to buy fuels exclusively from Certas for five years, while also opening up access to the firm’s marine terminal in South Uist to competitors.
But while the plans were welcomed on the Western Isles last night, politicians in Shetland reacted furiously. Local Liberal Democrat MSP Tavish Scott said: “Once again OFT have put Certas before Shetlanders buying expensive petrol and diesel. The OFT are proposing to consult on the Certas proposals.
“A so-called independent competition authority is now doing the distribution businesses job for them. This consultation is a smokescreen.” Scottish Secretary Alistair Carmichael, the northern isles MP, said he shared local “disappointment” and had asked the OFT to explain its decision.
The watchdog said that it considered “the likelihood of a successful case outcome resulting from further investigation of Certas’s conduct in the Shetland Islands does not justify the expenditure of resources that such further investigation would require”.
Ann Pope, an OFT director, hailed the proposals for the Western Isles.
“These proposed commitments offer a real opportunity for alternative fuel suppliers to enter the market which should ultimately help make fuel prices more competitive to the benefit of people and businesses in the islands,” she said.
Certas is the parent company of Scottish Fuels.
Angus MacNeil, SNP MP for the Western Isles, also welcomed the outcome.
He said: “I called several years ago for wholesaler competition and the ending of fuel contracts with retailers, and I am glad that it is now coming to fruition in all areas of the Western Isles and the main beneficiaries should ultimately be the customers at the pumps.”
The OFT launched the investigation in January 2013 amid concerns that Certas was signing up Western Isles filling stations to contracts which forced them to purchase fuels exclusively from them for five years, with no termination option.
In July last year the probe was extended to cover Shetland as well.
A consultation on the new proposals will run until May, then the OFT’s successor body, the Competition and Markets Authority, will decide whether to accept them and end the inquiry.
A Certas spokeswoman said: “Certas Energy has worked closely with the OFT to agree certain measures that reflect specific features of the Western Isles and welcomes further competition in the Western Isles. Current Western Isles contractual arrangements are similar to those Certas has in the rest of the UK, and are commonplace in the industry.
“However, these new measures will ensure that every Western Isles retailer currently supplied by Certas Energy will be given a range of contractual options to engage with the company in the future.
“We will be working with all parties to ensure the finalised proposals are implemented to this effect.”Comment, Page 28