No real competition among petrol companies

The Competition Commission of Singapore's conclusion that there is no evidence of collusion in pricing among petrol companies, although they monitor and react to one another's published prices ("Wholesale fuel and petrol pump prices aligned: Study"; Wednesday), does not give a convincing explanation of why our four petrol companies are charging consumers the same price.

From a layman's perspective, the reason for the existence of different companies in the market is to create competition so that consumers will ultimately benefit from lower prices.

What is the purpose of having 10 petrol companies if all of them are charging the same high price?

The same applies to our three telcos.

If the Competition Commission's assessment is correct, then it signals an utter failure in our original intention to have different companies in the market.

If all the four petrol companies are at liberty to monitor and react to one another's published prices by maintaining the same price despite a global drop in oil prices, they could, in fact, monopolise the market by not adjusting the price downward when it is time to do so.

In such a market, consumers are at the complete mercy of these companies as they do not have much choice.

The only way to break this oligopolistic hold on the market is to lift the three-quarter tank rule at the Causeway and inject some real competition into the market.

Only then will we get to see whether there is any "collusion" here to adjust pump prices.

Seah Yam Meng

A version of this article appeared in the print edition of The Straits Times on February 26, 2016, with the headline 'No real competition among petrol companies'. Print Edition | Subscribe