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Oil price fixers should face prison

Oil price fixers should face prison, says Cameron: ‘Rigging’ might have cost every household £2,000 

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Oil giants Shell and BP accused of fixing prices for more than a decade. PM said allegations ‘hugely concerning’ and threatens to prosecute bosses. Experts believe scandal could have cost consumers thousands at the pump

By Rob Davies and Jason Groves: PUBLISHED: 23:36, 15 May 2013 | UPDATED: 07:42, 16 May 2013

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Oil traders at Shell and BP should face prison if it is proved they conspired to fix prices, David Cameron said last night.

The Prime Minister made no attempt to disguise his anger as both of Britain’s oil giants were named among several firms accused of fixing prices for more than a decade.

He said the allegations were ‘hugely concerning’ and that anyone held responsible would face ‘major consequences’ if the claims were proved true.

In a statement to Parliament, Ed Davey, Secretary of State for energy, said firms found guilty of price-fixing would ‘feel the full force of the law’ and could face ‘heavy fines’.

He told MPs: ‘If it turns out to be the case that hard-pressed consumers have been hit in the pocket by manipulation of the markets, the full force of the law should be down upon them.’

Experts suggested that price-fixing could have cost every UK household £2,000 by driving up prices at petrol pumps.

Law firm Stevens & Bolton based its figure on data for household budgets stretching back to 2002, when the price-fixing is alleged to have begun.

In January 2002, motorists paid an average of 75.3p per litre, compared to 133.35p per litre so far this month.

Gustaf Duhs, head of competition law at the firm, said it was ‘reasonable’ to assume that cartels push up prices by 20 per cent.

He also predicted that oil firms found guilty of collusion to fix prices could face huge legal bills. ‘It wouldn’t be unrealistic to say that there could be hundreds of millions on the line,’ said Mr Duhs.

Speaking in New York, Mr Cameron said: ‘There is obviously the full force of the law available… so let’s let the investigators do their work. If this has been happening it is very, very serious and major consequences will follow.’

Mr Cameron initially said suspects could be prosecuted under a new offence brought in this year after the Libor interest rate scandal, which carries a maximum seven-year jail term.

But Downing Street later issued an embarrassing clarification that the offence does not cover the oil industry and cannot be imposed retrospectively.

Mr Cameron said he would reserve judgment on the role of the Office of Fair Trading (OFT), which has been accused of being asleep at the wheel.

‘The OFT is involved in this investigation but we have to get to the bottom of what happened first before I think we can pass judgment on the way regulators have worked in the UK,’ he said.

But Conservative MP Robert Halfon, a long-time campaigner against high fuel prices, lambasted the OFT over its inquiry this year into oil markets. It concluded that ‘competition is working well’ and said fuel price rises were due to ‘increases in tax and the cost of crude oil’.

‘What really happened was the OFT carried out a limp-wristed, lettuce-like inquiry when they should have done a full 18-month inquiry into what has been going on,’ said Mr Halfon.

He called for windfall taxes on companies proved to have been involved in price-fixing, to help pay for a cut in fuel duty.

SOURCE

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