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FTC warns Costco Japan, Baron Park for engaging in gasoline price war

Kyodo

The nation’s antimonopoly watchdog has issued a warning to two gasoline retailers, including the Japanese unit of U.S. retailer Costco Wholesale Corp., over a price war that it said could have threatened the activities of competitors.

Costco Wholesale Japan Ltd. and Japanese oil products retailer Baron Park Co. sold regular gasoline at their gas stations in Tokoname, Aichi Prefecture, at between ¥86 and ¥87 per liter for 10 days through Nov. 27. This compares with retail gasoline prices that averaged ¥123 to ¥129 in the prefecture in the weeks through early December, according to the Natural Resources and Energy Agency.

The prices were “excessively below” the costs of procuring the gasoline, the Fair Trade Commission said in a statement Thursday.

This was likely to cause “difficulties to the business activities of other petroleum products retailers in the surrounding area.”

Competition on prices intensified in mid-November when Costco opened a gas station near one affiliated with Baron Park, leading the two companies to sometimes sell gas more than ¥30 cheaper than others in the vicinity.

Costco, which supplies goods and services to customers under a membership scheme, said in a statement that the prices were set “to fulfill responsibility to our members according to our business policy of providing the best value to the members.”

The company “truly deplored” being unable to gain the watchdog’s understanding and that it led to a warning.

Baron, based in Aichi, said it will “take the warning sincerely and will follow the (commission’s) instructions.”

An official of a nationwide petroleum association said such an extreme price war could force other gas station operators out of business. This would “eventually undermine the convenience of consumers,” the official said.

The commission said it will launch an investigation if competition heats up again.

Meanwhile, the energy agency said the retail price of regular gasoline in Japan is cheaper now than at any time since June 2009 amid ample global crude oil supply.

Average prices dropped ¥2.70 from Dec. 14 to ¥123.50 per liter as of Monday. The Oil Information Center, which conducted the price survey for the agency, said prices are likely to remain at a low level for the meantime.

Regular gasoline prices fell in all 47 prefectures, with the largest drop of ¥7.70 in Wakayama, followed by Kochi, which saw a decrease of ¥5.

The average retail price of high-octane gasoline fell ¥2.70 to ¥134.30 per liter, and that of diesel oil fell ¥1.80 to ¥106.30.

Meanwhile, the two companies involved in the Tokoname price war were as of Tuesday selling gasoline at between ¥100 and ¥105.

  • Shiki Byakko

    Now lowering prices is illegal too?