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The Great Moroccan Oil Heist: Price-Fixing Giants Exploit Consumers as Regulators Falter
For years, Morocco's major oil companies have orchestrated an intricate price-fixing scheme, siphoning billions from unsuspecting consumers while regulatory bodies turned a blind eye. However, this elaborate web may finally be unraveling.
The Competition Council of this North African nation has accused nine energy behemoths of orchestrating an illicit fuel pricing conspiracy, asserting their dominance by unlawfully carving up the market. The council contends that these companies not only restricted competition but also manipulated pricing, and unlawfully partitioned supply chains and public sector contracts among themselves.
The ramifications of these anti-competitive practices have been widespread in Morocco. Artificially inflated fuel costs have sent shockwaves through transportation and manufacturing sectors, exacerbating the economic burden on consumers already grappling with a cost-of-living crisis.
This collusion appears to have disproportionately enriched companies already dominating Morocco's energy sector. Astonishingly, a mere four firms control nearly two-thirds of the domestic oil market.
Faced with the damning allegations, rather than contesting the charges, the implicated companies chose to settle. They have agreed to pay a staggering combined fine of 1.84 billion Moroccan dirhams (equivalent to around $184 million). Additionally, these companies committed to reforming their practices to "enhance the competitive functioning of the hydrocarbon market."
However, skepticism looms over the adequacy of the penalty. In 2020, the initially proposed fines represented a higher percentage of revenues for some firms. The reasons for this reduction in the settlement amount remain unclear.
Doubts persist regarding the efficacy of regulators in overseeing these oil giants, particularly given their past failure. The competition council admitted its inability to control the market between 2015 and 2018, the very period when the alleged price manipulation occurred.
Further, concerns arise about potential conflicts of interest within the Moroccan government. The current prime minister, a former agriculture minister and oil tycoon, holds a substantial stake in Afriquia, the domestic firm commanding the largest market share.
The Competition Council's case has laid bare the glaring weaknesses in overseeing Morocco's critical energy industry. While the proposed remedies may curb immediate abuse, the underlying governance issues endure, leaving the door wide open for new schemes that undermine consumer interests.