GAS2LIQUIDS, a wholesaler which imports petroleum products, has appealed against an exemption granted to some of South Africa’s largest oil companies from certain prohibitions under the Competition Act.

This is the first appeal lodged with the Competition Tribunal against an exemption from the Competition Act.

The purpose of the exemption order, granted last year, was to ensure economic stability in the petroleum and refining sector.

Gas2Liquids said in its argument filed with the tribunal that the Competition Commission should not have granted the exemption, arguing that only a limited number of industry players would benefit from the exemption granted to the South African Petroleum Industry Association (Sapia) and its members.

Sapia, its members and other industry participants were allowed to participate in joint arrangements and share information to the extent necessary to co-ordinate their logistical and supply requirements.

Sapia was also told to open its membership to existing and aspiring players in the petroleum and refining industry on "fair, reasonable and transparent grounds".

The economic stability of the industry was designated by the minister of trade and industry in light of the recommendations of an investigation by a government-appointed team after severe fuel shortages in December 2005. The designation allowed the industry to apply for exemption to certain conduct that would normally be prohibited by the Competition Act, such as meetings with competitors or making agreements with them.

The commission imposed conditions aimed at reducing anti-competitive outcomes when it granted the exemption.

Gas2Liquids said the exchange of information sanctioned by the exemption enabled the big oil companies to maintain their allocated markets and market share without the need to improve infrastructure.

"Accordingly the commission effectively sanctions impediments to expansion in the market for the supply of fuel products whilst granting Sapia and its members the opportunity to arrange the market in a manner that suits their interests without having to concern themselves with the effects of competition," the company said.

In response, the commission said it had studied the agreements, and the exemption granted was not unclear. It could not be argued that Sapia’s members had been given a blanket exemption to co-operate. Neither the commission nor the minister ever suggested the exemption was a "magic pill" for problems.