在竞争政策中的倡导作用：阿根廷汽油市场案例

WPS la130 POLICY RESEARCH WORKING PAPER 3 13 0 The Role of Advocacy in Competition Policy The Case of the Argentine Gasoline Market Tomds Serebrisky The World Bank World Bank Institute Finance and Private Sector Development Division September 2003  I POLICY RESEARCH WORKING PAPER 3130 Abstract In 2000 the Argentine antitrust authorities conducted a authorities exercised its advocacy role in a country that study of the state of competition in the gasoline market. underwent an extensive process of deregulation and The study concludes with a set of policy privatization. Serebrisky assesses the design and impact recommendations (that is, limits to vertical integration of the policies recommended by the Argentine antitrust and to the duration of contracts between oil companies authorities. In particular, he evaluates under which and gasoline stations) which were subsequently circumstances the new policies can reduce barriers to implemented by the Argentine government. This was one entry and foster competition in the Argentine gasoline of the rare occasions where the Argentine antitrust market. This paper-a product of the Finance and Private Sector Development Division, World Bank Institute-is part of a larger effort in the institute to increase the understanding of infrastructure regulation. Copies of the paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Gabriela Chenet-Smith, room J3-304, telephone 202-473-6370, fax 202-676-9874, email address gchenet@worldbank.org. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The author may be contacted at tserebrisky@worldbank.org. September 2003. (31 pages) The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Produced by the Research Support Team  The Role of Advocacy in Competition Policy. The Case of the Argentine Gasoline Market. Toma's Serebriskyl After decades of imposing several types of regulations, the Argentine government deregulated the gasoline market in 1991. Once the restructuring and privatization of Yacimientos Petroliferos Fiscales (YPF) -the formerly state-owned petroleum company and the largest firm in Argentina- was completed in 1993, the law established that the government should reduce its role exclusively to the enforcement of industry-specific environmental laws. Since 1997, following a sharp decline in crude oil prices, there have been complaints that the deregulation of the Argentine gasoline market was not successful because the level of gasoline prices -net of taxes- is too high and they do not adjust to changes in crude oil prices, especially when crude oil prices fall. As an example, from January 1997 to October 1998, the crude oil price fell 55.4% while the net price of premium gasoline fell only 7.4%. For the same change in crude oil prices, the net price of premium gasoline in the United States fell 19.8%2. ' World Bank Institute, tserebriskvyworldbank.org. The findings, interpretations and conclusions expressed in this paper are entirely those of the author. I would like to thank Antonio Estache, Lucas Grosman, Diego Margot, Pablo Mercuri and Pablo Presso for their comments and suggestions. 2 Mercuri (2001) presents a detailed study of price asymmetries in the Argentine gasoline market, and Serebrisky (2000) shows the evolution of prices in Argentina and the United States.  The behavior of prices in the Argentine gasoline market motivated academic research aimed at determining the intensity of competition in this market. The conclusions of the papers written about this topic are contradictory. Aspiazu (1995) argues that the observed differences in levels and adjustment patterns of gasoline prices between Argentina and the United States (which is used as a benchmark for a competitive market) is a consequence of an oligopoly operating under collusion. On the contrary, FEEL (1999) and Coloma (1997) do not find any evidence of the existence of an implicit agreement. Serebrisky (2000) presents different econometric tests to evaluate the hypothesis of tacit collusion, finding no conclusive evidence of this type of behavior. But he agrees with a study the Argentine Antitnist Commission did in 1998 and concludes saying that "after almost a decade of deregulation, price competition in the gasoline market is less intense than what the Argentine government expected to be". In 2000, the newly created Secretariat of Consumer Affairs and Defense of Competition (SDCyC), elaborated a report3 of the gasoline market which recommended the adoption of specific policies to increase the competition in this market. The most important policy recommendations were: (a) limit the duration of contracts between oil companies and dealers that operate gasoline stations and (b) establish a ceiling to vertical integration, measured in a percentage of the network of gasoline stations that an oil company can own and operate. The Argentine president, following this report, issued a decree that implemented new policies in the gasoline market. This decree is one of the few examples of successful advocacy achieved by the Argentine SDCyC. In Latin American countries it is not common for competition agencies to act on their own initiative and ask governments to adopt pro-competitive policies. In general, they limit their role to merger requests or to solve accusations of anticompetitive conducts. However as explained in a recent survey (International Competition Network, 2002), competition agencies are increasing their advocacy role to promote market structures more supportive of intense competition. Advocacy allows a competition agency to expand its reach and play an important role in areas where its role is usually ignored. In particular, advocacy can give a competition 3 httD://www.minproduccion.gov.ar/secdef/basehome/merCadodecombustibles.pdf 2  agency a word in the design of restructuring of industries before privatization or deregulation, in the concession or licensing processes and in the way access rules are set. In Argentina, the competition agency could not prove that oil firms engaged in any anticompetitive conduct. Therefore, it could not use the instruments the antitrust law has -sale of assets, open access to essential facilities- to modify behavior and market structure. However, the fact that oil firms were not colluding or did not engage in any other type of anticompetitive conduct did not bar the antitrust authority to use its advocacy power by evaluating the state of competition in the market and asking the government to adopt policies to stimulate more competition. In this paper we present the evidence that supported the policy recommendations and critically assess their foundation and the impact they have had in the oil industry. In particular we evaluate the ability of the policies adopted in Argentina to modify the market structure and incentive a more aggressive price competition. This paper- is organized as follows. Section 1 presents the state of the Argentine gasoline market before and after its deregulation4. Section 2 explains the relation between gasoline prices, import parity and competition. Section 3 elaborates on the consequence that YPF's privatization model had on the intensity of competition in the Argentine gasoline market and Section 4 emphasizes the impact that the absence of independent refineries and a developed wholesale market have on the intensity of competition in the Argentine gasoline market. Sections 5 describes how the SDCyC identified the exclusive contracts between oil companies and gasoline stations as a significant barrier to entry. Section 6 and 7 describe and evaluate the policy recommendations. Finally, section 8 concludes. 1. The Argentine Gasoline Market Until 1991, the evolution of the Argentine gasoline market was characterized by the belief that petroleum was a strategic resource. This belief justified a significant government intervention that was direct, through the control of the largest firm in the oil 4 This paper does not explain the effects that the major devaluation of the Argentine peso in 2002 had on the gasoline market (i.e. quantity demanded, changes in sector taxes, subsidies implemented by the national government). 3  industry -YPF- and indirect via the regulatory framework. Before its privatization, YPF controlled 63% of the refining capacity, while Esso and Shell, the other two large firms in the market, accounted for a combined 32% of the total refining capacity. The government determined domestic oil prices, wholesale and retail gasoline prices, retail margins and taxes. The law guaranteed that regulated prices should allow firms to cover production costs and obtain a reasonable return. But in reality, the government did not apply this law. Given that gasoline is an important determinant of the price index, whenever there was a new stabilization plan, gasoline prices were used as an "anchor". The consequent reduction in margins forced oil firms to be permanently involved in negotiations with the sector authorities. Not only the domestic commercialization was regulated. Imports of crude oil and gasoline were authorized only when there was a shortage in domestic production. There were almost no exports of crude oil or refined products during the period prior to deregulation due to inefficiencies in exploration, extraction and refining of crude oil. The government decided where gasoline stations should be located. A license was provided to the refinery and not to the owner of a gasoline station, implying that a gasoline station had to buy gasoline exclusively from the refinery that owned the license. To avoid hold up problems, gasoline station's margins were also regulated. The criterion by which new gasoline stations were allowed to open was not clear but one of the rules closely followed was that they should not compete among themselves. The condition of local monopolies and regulated prices gave no incentives to provide adequate services to the consumer. Moreover, the inefficient government controls induced retail outlet operators to cheat adulterating gasoline. In January of 1991 the Argentine gasoline market was deregulated. Restrictions on prices, refining capacity, location and quantity of retail outlets were eliminated. YPF was privatized in 1993, but a new management began a radical transformation process in 1991 aimed at increasing productivity. Labor productivity increased significantly as total personnel decreased from fifty two thousand in 1990 to six thousand in 1994 while total sales increased from 3.5 to 4.4 billion dollars during the same period. 4  A comprehensive analysis of competition in gasoline markets has to consider the state of competition in each of the production and commercialization stages, from extraction of crude oil to retail distribution of gasoline. In Argentina, there is consensus (Montamat et al. 1999) that the upstream segment of the market (exploration, extraction and commercialization of crude oil) is competitive. The deregulation of the oil market and the privatization of YPF allowed Argentina to become an exporter of crude oil, although it has a very small share of the world trade. Refining firms that are not integrated backwards (do not extract oil) can buy crude oil from more than ten international firms that extract oil in Argentina. Due to the nonexistence of legal (tariffs or quotas) or logistic (for instance, storage facilities) barriers to trade, refining firms can buy crude oil from suppliers in other regions of the world. The existence of freedom to trade implies that domestic oil producers can not extract any economic rent . In other words, given that crude oil producers can not exercise market power, we can argue that this market is competitive. Seeing that there are no competition concerns in the upstream stage of the market, the study of the state of competition has to focus in the downstream stage of the market, that is, the refining, wholesale and retail distribution of gasoline. In Argentina, four firms account for more than 85% of the gasoline market. RepsolYPF6 is the largest of them, and in 1999 the Spanish firm Repsol bought the majority stake. This firm is present in all regions of Argentina. It has the two largest refineries and co-owns with Perez Companc, a domestic firm7, the only refinery in the north, adding up to more than 50% of the refining capacity in the country. Esso (owned by Exxon) and Shell have been in Argentina for more than fifty years and each of them has only one refinery, which are located close to Buenos Aires. Their combined share of the refining capacity is 32%. EG3 is the result of a merger, in 1995, of three small domestic oil firms. This firm, that was acquired by Repsol in 1996 and later -in 2000- 5 In fact, domestic oil producers can sell in Argentina at a price slightly inferior to the import parity. Thus, we can argue that transportation costs are a source of economic rent derived by location. 6 In this paper, the names YPF and RepsolYPF are used indistinctively. After Repsol bought YPF these companies merged and adopted RepsolYPF as the new company's name. 7 Petrobras made an offer to buy Perez Companc. This merger is pending the approval of the Argentine Antitrust Agency. 5  sold to Petrobras, the Brazilian state-owned oil firm has only one relatively small refinery (5% of total refining capacity in Argentina) 600km south of Buenos Aires. Figure 1 presents the evolution of market shares for premium8 gasoline of the largest four firms and a category "other" that aggregates both small branded firms (Sol Petr6leo, Refinor, Rhasa) and unbranded retail outlets. It is important to highlight that the SDCyC policy recommendations were made in 2000. Up to that year9 market shares were remarkably stable, with the only exception of the "other" firms that doubled their market share from 5 to 10%. The growth in market shares of the latter group has been accompanied by an impressive growth in retail outlets. Table 1 shows the evolution of retail gasoline outlets in Argentina. The biggest change in the quantity of retail outlets since deregulation is the fall in the quantity operating under the RepsolYPF flag, matched by an almost equivalent increase in the quantity of unbranded outlets. Looking at figure 1 and table 1, it should come as a surprise the increase in RepsolYPF's market share during 2002 and the parallel fall in the market share of "others". As we explain in the Policy evaluation section this change was caused by the devaluation of the Argentine currency that has made the new policies adopted for this market very difficult to evaluate. 8 The Secretariat of Energy established that premium gasoline has to have more than 93 RON while regular gasoline can have between 83 and 93 RON. In Argentina the ratio of premium to regular gasoline consumption is more than 2. 9 1995 is the first year with reliable information. From 1991 to 1994 there are no comprehensive price and quantity time series data. 6  Figure 1 Market Shares Premium Gasoline (Country level) 60 50 _ 40 %30- 20 - 10 -- - - -- - 0 - 1995 1996 1997 1998 1999 2000 2001 2002 I-EG3(PETROBRAS)+--ESSO --REPSOLYPF -v-SHELL -*-OTHERS Source: Secretariat of Energy, Argentina TABLE 1: Evolution of retail outlets 1990 %Total 1994 %Total 1998 %Total 2001 %Total RepsolYpf 2909 54.78 2753 51.70 2537 40.49 1955 31.08 Esso 947 17.83 1003 18.84 976 15.58 1145 18.20 Shell 952 17.93 933 17.52 1068 17.04 849 13.50 Eg3 502 9.45 565 10.61 622 9.93 668 10.62 Sol 0 0 23 0.43 146 2.33 254 4.04 Rhasa 0 0 N.D N.D 54 0.86 146 2.32 Refinor 0 0 N.D N.D 42 0.67 57 0.91 San Lorenzo 0 0 N.D N.D 46 0.73 62 0.99 Unbranded 0 0 48 0.90 775 12.37 1155 18.36 TOTAL 5310 5325 6266 6291 Source: Secretariat of Energy, Argentina ND: No data available 7  2. The evolution of prices and their relation with the import parity In the preceding paragraphs we described the evolution of market shares and retail outlets. In general, most of the complaints about competition in the Argentine gasoline market rely on the evolution of prices. It is apparent from figure 2 that gasoline prices in Argentina have a very different adjustment pattern to changes in crude oil prices than in the United States. Figure 2 Gasoline Prices. Net of taxes. US and Argentina so. . ._. 45 40 35 30 +, 25 t/ 20 _>e 10 5 O ,,,, ............,,,,,,,,,,,.., , , , , , ,, , , , , , , , ,,,,,,,,,,,,,,,,,,,,,,,.. 1995 1996 1997 1998 1999 2000 2001 -4Premium US - Premium ARG - Diesel US --Diesel ARG --WTI| Source: Secretariat of Energy, Argentina. Energy Information Administration, U.S In the United States fluctuations in crude oil pricesl' are reflected -with a lag- in gasoline prices. Besides, prices of all types of gasoline, -diesel, regular (not shown in the figure) and premium- tend to move in the same direction. This price setting process is strikingly different in Argentina where diesel, premium and regular gasoline prices do not move in a parallel way. In Argentina, it is evident from figure 2 that gasoline prices do not closely respond to changes in crude oil prices. It is remarkable the stability of diesel prices from 1995 to 2000, a period characterized by significant upward and downward '