DOJ to resolve price-manipulation case vs Chevron

Print Email Details Category: Economy 25 Jun 2013 Written by Rene Acosta Justice Secretary Leila de Lima said on Tuesday her office will resolve the complaint filed by a local fuel distributor against officials of Chevron Philippines Inc., producer of Caltex petroleum products, for alleged price manipulation. “Since it’s a petition for review, the same will be handled and resolved by the Office of the Secretary,” she said. “But, of course, we will request for inputs and applicable studies from the Office for Competition, which has expertise on the matter,” de Lima added.

De Lima agreed that the complaint filed by the Petroleum Distributors and Services Corp. (PDSC) could be a test case to the DOJ’s powers to prosecute cases of oil cartelization. In its complaint, PDSC accused Chevron of creating and operating its own service stations in the metropolis called Caltex Coco, which supposedly controls and manipulates prices of fuel and oil products. PDSC, a dealer of Caltex products for over 20 years, has been engaged in retailing fuel products for almost 50 years.

Among those charged were former directors and officers of Chevron and Chevron Services Timothy Leveille, Rebecca Alivio, Ramon Ortiz, Frumencio Deguito, Aner Anda, Randall Johnson, Steven Mulvaney, Armando Diaz, Carlito Lopez, Leo Vasco Dagamac, Glenn Lynch, Husain Shibly Latiff and Carol Bautista. The PDSC alleged that Chevron had created a scheme that enabled it to substantially influence the drop or increase of fuel prices through its Cocos by having the ability to set the prices of fuel on both ends—supply and retail

As such, it prevented and restrained free competition by giving preferential treatment to its Cocos in terms of pricing, to the detriment of local Caltex dealers, whose profit depends entirely on the price of fuel products supplied by Chevron.

The complaint also alleged that since Chevron basically controlled the street prices of the Cocos, it can easily drop or increase the prices in one area, which local dealers, especially Caltex dealers, would be obligated to follow because Chevron does not allow its local dealers to determine their own pricing levels. PDSC’s complaint had been dismissed by the Makati City prosecutor’s office, prompting to appeal before De Lima’s office through a petition for review.