Two years ago, the Competition Agency of Georgia fined oil companies GEL 50 million. The oil companies appealed the fine and the Agency lost all the cases in court
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A member of the United National Movement, Roman Gotsiridze, published the following statement on his personal Facebook page: “Two of the most useless state organs are the business ombudsman service (it has to be abolished immediately) and the Competition Agency (the number of employees has to be reduced to a minimum). The only thing that the latter has accomplished was to fine oil companies GEL 50 million two years ago… The Agency lost all the cases in court.”

FactCheck verified that part of the statement which concerns the fining of the oil companies and losing the court cases related to this issue.

According to Decree N81, issued on 14 July 2015, as a result of research conducted on the vehicle fuel market, the Competition Agency of Georgia ruled that all major oil companies operating in Georgia had been violating the Law of Georgia on Competition and acted in unison to fix the prices. The Competition Agency of Georgia fined the oil companies a total of GEL 55 million. The distribution of the fines was as follows:

Socar Georgia Petroleum – GEL 14,381,385

Sun Petroleum Georgia – GEL 11,267,384

Rompetrol Georgia – GEL 10,845,806

Wissol Petroleum Georgia – GEL 10,426,393

Lukoil Georgia – GEL 4,470,260

L Oil – GEL 1,209,890

ETI – GEL 1,172,766

Binuli 1 – GEL 654,445

Additionally, 23 economic agents working under the franchising/sublicensing agreements with Lukoil Georgia LTD and Rompetrol Georgia LTD were also fined GEL 200 for violating the Law of Georgia on Competition.

All of the fined oil companies appealed the Competition Agency of Georgia’s ruling in court. According to the 2016 Report on the Activities of the Competition Agency, there were nine court cases in progress in regard to oil companies.

In 2016, Tbilisi City Court did not satisfy the lawsuit of Socar Georgia and Lukoil Georgia against the Competition Agency and left the Agency’s decision unaltered. The ruling of Tbilisi City Court was later appealed by these aforementioned companies in the Tbilisi Court of Appeals.

On 27 April 2017, Tbilisi Court of Appeals satisfied Socar Georgia’s lawsuit. The court decided that due to a lack of evidence, the fine imposed against Socar Georgia petroleum was null and void. The case was sent back to the Competition Agency for further research. The Competition Agency appealed the ruling of Tbilisi Court of Appeals to the Supreme Court of Georgia. The Supreme Court ruled that the appellation of the Competition Agency was inadmissible and left the decision of Tbilisi Court of Appeals in force. The Motivation of the Supreme Court of Georgia highlights that important circumstances required to make the ruling were not sufficiently researched. This task belongs to the scope of the administrative organ (in this case the Competition Agency of Georgia).

There are eight additional court cases in progress vis-à-vis oil companies versus the Competition Agency of Georgia. FactCheck contacted the Legal Department of the Competition Agency which confirmed this information. Based on FactCheck’s inquiry as to whether or not they would study the vehicle fuel market anew, the Competition Agency replied: “We will wait until the court rulings are made and act respectively to the court decisions. The Competition Agency will only conduct a revision of the Socar Georgia case.”

Of note is that the Competition Agency of Georgia has conducted a consolidated study of the vehicle fuel market and if important circumstances were not sufficiently researched in the case of Socar Georgia Petroleum and there was a lack of evidence, it is logical that the court would issue similar rulings in the cases of the other oil companies as well.

 

Conclusion

In July 2015, as a result of research conducted by the Competition Agency of Georgia, the Agency proclaimed that major oil companies (Socar, Gulf, Rompetrol, Wissol, Lukoil, L Oil, ETI and Binuli 1) had been violating the Law of Georgia on Competition and acted in unison to fix prices. The Competition Agency fined the oil companies a total of GEL 55 million.

The aforementioned oil companies receiving the fines appealed the decision of the Competition Agency in court. Tbilisi Court of Appeals ruled that the fine against Socar Georgia was null and void because of a lack of evidence and ordered the Competition Agency to study the case anew. The Competition Agency appealed the aforementioned decision of the Supreme Court of Georgia although the Court later ruled the lawsuit as inadmissible. In total, there were nine cases vis-à-vis the oil companies. Of these, one is finished whilst the court disputes for the remaining eight have not yet started. However, taking into consideration the fact that the other oil companies have been appealing the same decision of the Competition Agency, it is highly likely that the court will issue similar rulings for the other cases as well.

FactCheck leaves Roman Gotsiridze’s statement WITHOUT VERDICT at this moment. We will follow the aforementioned court cases and come back to this topic again in the future.

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