Brussels has stepped up its probe into price fixing in energy markets, raiding several companies in two European countries involved in producing and trading the biofuel ethanol.

The European Commission confirmed that it mounted the unannounced inspections on Tuesday, acting on concerns “that price benchmarks may have been distorted through anti-competitive behaviour”.

The action follows raids in May 2013 on the offices of Platts, a commodity price reporter, and the oil majors BP, Shell and Statoil, seeking evidence of price manipulation. The Commission did not identify the companies it raided on Tuesday.

The year-old Brussels investigation is looking at companies colluding to rig prices as well as possible abuse of a dominant position in both oil and biofuels markets. The second phase of the probe appears narrowly focused on the ethanol market and “possible collusion when submitting price information to a price reporting agency”, according to the commission.

While Brussels has never fully disclosed whether its 2013 investigation specifically related to a suspected cartel in petrol or oil prices, traders and oil companies feared it marked the start of a regulatory assault on big commodity hubs such as the $100bn Brent futures market.

Lawyers suggested the additional raids could have been prompted by evidence uncovered in previous inspections, or a whistleblower seeking immunity and handing Europe’s top competition authority fresh incriminating information. There was no immunity applicant before inspections were launched last year, according to people familiar with the case.

Pannonia Ethanol, a Hungarian ethanol producer, had lodged an antitrust complaint in 2012 with the commission, arguing it was prevented from fully contributing to Platts’s price assessments.

Price-reporting agencies publish data underpinning billions of dollars of oil, gas and electricity trading, which affects household energy bills. Platts, a unit of New York-listed McGraw Hill, relies heavily on bid and offer quotes, as well as actual transactions, to assess prices.

That model has been under scrutiny by regulators following the Libor rigging scandal, although price-reporting agencies reject comparisons between their assessments and the method for setting Libor.

“The prices assessed and published by Price Reporting Agencies serve as benchmarks for trade in the physical markets and in the financial derivative markets for a number of commodity products in Europe and globally,” the commission said.

“The importance of these benchmarks and the absence of regulation may leave scope for anti-competitive behaviour leading to price distortions. Even small distortions may have a significant impact on prices, potentially harming consumers.”

source: financial times


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