Irish Competition Authority Decisions

1. Notification was made of an agreement by Statoil Ireland Limited on 30 September 1992 with a request for a licence under Section 4(2) of the Competition Act, 1991 in respect of its Equipment Loan Agreement. The notification indicated that the Equipment Loan Agreement was made with both exclusive distributors and with commercial customers. By letter of 22 August 1994 Statoil's solicitors requested that the notification be considered by the Competition Authority only in respect of agreements with exclusive distributors and that the notification in respect of agreements with commercial customers be withdrawn. This notification is, therefore, linked to the Competition Authority's decision of 21 April 1994 concerning Statoil Distributor Agreements in relation to Cash Advances and Loans

(decision no. 321).

2. The decision concerns a document signed by Statoil and some of its distributors namely an Equipment Loan Agreement.

3. Statoil Ireland Limited is a limited company engaged in the supply of oil products, both retail and commercial. The other parties to the arrangements are exclusive distributors of petroleum products.

4. The products involved are fuel oils. The oil companies involved in this market generally use distributors to deliver to final customers and do not use own staff as in the past.

5. Statoil notified its exclusive distribution agreement for fuel oils (CA/448/92E), and the Authority considered that the agreement satisfied the conditions of the category licence for exclusive distribution agreements (decision no. 144 of 5 November 1993). Statoil also notified the Equipment Loan Agreement which is associated with the exclusive distribution agreement and which is the subject of this decision.

The Equipment Loan Agreement relates to a standard loan agreement for tank storage and equipment whereby Statoil makes available to its distributors items of equipment on loan for a period of ten years. During this period, the distributor is required to confine purchases to be stored in or handled through the equipment to brands approved by Statoil, and not to use the equipment for or in connection with any other brands. The distributor is required to maintain and repair the equipment for ten years, even though it remains the property of Statoil. Statoil is entitled to lock and seal the equipment, and to place identification marks on the equipment, and the distributor may not interfere with, or obscure, these marks.

6. Section 4(1) of the Competition Act, 1991 prohibits and renders void all agreements between undertakings which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State.

7. Section 3(1) of the Competition Act defines an undertaking as "a person being an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service." Statoil Ireland Limited and the distributors are engaged in the sale of motor fuels for gain, and are therefore undertakings within the meaning of Section 3(1) of the Competition Act.

The Agreement

8. The notified agreement is connected with, and dependent upon, the exclusive distribution agreement, it forms part of the exclusive distribution arrangements and in some respects it strengthens those arrangements. In the opinion of the Authority, while the agreement might contain some provisions which by themselves could offend against Section 4(1), the notified agreement offends against Section 4(1) of the Competition Act because it underpins an exclusive distribution agreement which itself offends against Section 4(1) of the Competition Act for the reasons given in the category licence for exclusive distribution agreements.

9. Under Section 4(2), the Competition Authority may grant a licence in the case of any agreement or category of agreements which, "having regard to all relevant market conditions, contributes to improving the production or distribution of goods or provision of services or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit and which does not-

(i) impose on the undertakings concerned terms which are not indispensable to the attainment of those objectives;

(ii) afford undertakings the possibility of eliminating competition in respect of a substantial part of the

products or services in question."

10. The Authority has decided that the basic Statoil standard exclusive distribution agreement satisfies the conditions of the category licence. It is of the opinion that the notified related agreement also satisfies the conditions of the category licence, for the same reasons, and thus it also satisfies the requirements of Section 4(2) of the Competition Act. This applies also to any exclusivity provisions specifically included in the notified agreement. A licence may therefore be issued in relation to the Statoil Distributor Equipment Loan Agreement. The licence comes into effect on 20 September 1994. It will expire on the date of expiry of the category licence for exclusive distribution agreements, that is on 31 December 1998.

11. In the Authority's opinion, Statoil Ireland Limited and the other parties to the agreement are undertakings . The notified agreement between the parties is an agreement between undertakings. The Authority considers that the notified agreement offends against Section 4(1) of the Competition Act, 1991. The Authority considers that the notified agreement satisfies the conditions of Section 4(2) of the Competition Act. It has therefore decided to issue a licence in respect of the notified agreement, and the licence shall apply from 20 September 1994 to 31 December 1998. It is not considered necessary to attach any conditions to the licence.

12. The Competition Authority has issued the following licence:

The Competition Authority grants a licence under Section 4(2) of the Competition Act, 1991 to the equipment loan agreement between Statoil Ireland Limited and its distributors (notification no. CA/450/92E) notified under Section 7 on 30 September 1992, on the grounds that, in the opinion of the Authority, all the conditions of Section 4(2) of the Competition Act, 1991 have been fulfilled.

The licence shall apply from 20 September 1994 to 31 December 1998.

For the Competition Authority

Patrick M. Lyons

Chairman.

20 September 1994