Excessive Pricing: Remedies for the Jet Fuel Market at Vienna International Airport

04.04.2008

Supply of jet fuel
After comprehensive investigations (for details consult Annual Report 2007) the Austrian Federal Competition Authority (FCA) submitted a case concerning excessive pricing of OMV in the jet fuel market at VIE to the Cartel Court, the decision making body in antitrust matters.

The FCA aimed at imposing structural remedies able to address the two main competition issues:

- OMV controls - on the location of its refinery (in 7 km distance from the airport) - the only viable supply alternative: Rail transport. Furthermore the sole storing facilities linked to the rail discharging installations as well as the pipeline to the airport are part of the refinery installations of OMV.

- The control of the supply chain mentioned above combined with joint control of the hydrant installations under the airfield (FSH) enables OMV to closely monitor all the supply of the competitors.

After a series of negotiations OMV had to agree with remedies and in April 2008 the Cartel Court imposed three structural remedies on OMV. The measures taken had previously been subjected to a market test.

1. The whole alternative supply chain from the railway discharging facility to the airfield has to be opened to all interested parties in a clear, transparent and foreseeable manner. As all these installations are imbedded into the refinery a detailed technical annex for the conditions of use was elaborated and is integral part of the remedies.

2. OMV has to disinvest its share of FSH; a trustee is mandated with the disposal.

3. OMV has to prevent the information flow concerning the supply of competitors between its logistics units and its jet fuel sales unit.

A separate private litigation case initiated by Austrian Airlines (AUA) is still pending.

Hydrant installations under the airfield (FSH)

The FCA also investigated a possible price abuse of FSH. Its hydrant installations constitute an essential facility as no other means exist to deliver the jet fuel onto the airfield. It is therefore comparable to other essential parts of airport infrastructure.

In the end the FCA decided not to file an application with the Cartel Court as other ways to solve the competition problems could be found:

1. With its investigations the FCA initiated a change in the law governing airport infrastructure: From January 2008 on hydrant installations became subject to regulation.

2. The regulator (ministry of traffic) has almost finalized the administrative procedures to which the FCA contributed its extensive cost calculations.

Enclosed please find a presentation.