Irene Fafaliou, Ph.D., Department of Economics, University of Piraeus, 80, Karaoli & Dimitriou Str, Piraeus, 18534, Greece and Michael Polemis, PhD, Hellenic Competition Commission, 1 Kotsika Str & Patission Ave, Athens, 10434, Greece.
In most European countries the oil industry is still heavily regulated due to fears of problems that may arise particularly in case of an oil crisis. This paper attempts to shed some light on the level of market power and competition in the field. In order to attain this objective, it is examined in depth the case of the Greek oil market focusing on the wholesale and retail segment. Our analysis indicates that although the Greek oil industry has been deregulated since 1992, there are certain legal and structural distortions in some submarkets that still impede the level of effective competition. In particular, it is demonstrated that in the wholesale segment of the market, the legislative regime for the transportation of liquid fuels creates an important barrier to entry and facilitates the established oil companies to exercise their market power. In the retail segment competition appears to be relatively strong. However, we suggest that some problems may occur in this submarket too derived from deficiencies in the existing legal framework. These are high rents for license contracts of fuel stations in national roads, fixed trading hours of liquid fuel service stations and the prohibition of sale of fuels by hypermarkets.