Commission’s LPG Market Inquiry recommendation yields positive outcomes
The Competition Commission has accepted the withdrawal of a complaint by propellants supplier Puregas against liquefied petroleum gas (LPG) manufacturer and supplier Shell Downstream for unfair business practices, after Puregas was able to secure a supply agreement on favourable terms.
In February, Puregas lodged a complaint against Shell with the commission, alleging that Shell had cancelled its supply contract for propane and butane and that this amounted to an exclusionary act in contravention of the Competition Act.
During its investigation, the commission found that Shell had sold its LPG business to Easigas a few years ago, in terms of which Shell was to exclusively supply LPG to Easigas.
However, in an effort to comply with the commission’s recommendation in the LPG Market Inquiry, Shell decided to renegotiate its supply contract with Easigas.
In terms of the new contract, effective from February 2018, Shell will exclusively supply 90% of its LPG production to Easigas and allocate the remainder to small wholesalers in line with the commission’s recommendations in the LPG Market Inquiry.
The new supply contract resulted in Puregas no longer being able to buy its product requirements directly from Shell as it does not fall within the definition of a small wholesaler as per the LPG Market Inquiry.
Puregas was required to buy its product requirements from Easigas and was concerned that the price it would pay for propane and butane was likely to be higher.
However, Puregas has since submitted that it has managed to secure a supply agreement with Easigas on favourable terms.
As such, Puregas has taken a decision to withdraw its complaint against Shell.
The commission has accepted the withdrawal and considers the matter to be finalised.
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