Big Oil Let Off Hook Days After EU Drops Wall Street Probe

  • EU's Vestager shows willingness to dump cases going nowhere
  • Commission retreats from high-profile oil investigation

Royal Dutch Shell Plc, BP Plc and Statoil ASA no longer face an European Union investigation into potential manipulation of fuel benchmarks, the regulator indicated on Monday.

Photographer: Andrey Rudakov/Bloomberg

Days after dropping a high-profile probe into some of Wall Street’s top banks, the European Commission quietly sounded the retreat from an antitrust case that’s embroiled some of the world’s biggest oil producers since 2013.

Royal Dutch Shell Plc, BP Plc and Statoil ASA no longer face an European Union investigation into potential manipulation of fuel benchmarks, the regulator indicated on Monday. Instead, Margrethe Vestager, the EU competition chief, ramped up a related case focusing on bioethanol producers, opening a formal investigation into Abengoa SA, Alcogroup and Lantmaennen -- all suspected of colluding on ethanol benchmarks.

"It’s important to close down probes when evidence and data don’t support the suspicions," Vestager said in an interview with Bloomberg in Copenhagen. "When it turns out there’s no basis for a case, it should be shut down instantly."

Letting big oil go is a surprise ending to an intensive two-year probe that was heralded as one of the priorities of Vestager’s predecessor, Joaquin Almunia. It comes days after she wound down another one of the Spaniard’s top cases -- a sweeping investigation into whether a dozen banks, including Goldman Sachs Group Inc. and JPMorgan Chase & Co., conspired to shut exchanges out of the credit default swaps business.

Unfinished Business

Lawyers say it’s a positive sign that Vestager -- who inherited a stack of unfinished cases from Almunia when she took over last year -- is willing to cut the Brussels-based commission’s losses, freeing up resources wasted on dead-end probes.

“The decision to terminate the investigation may be difficult to take as it may be seen as a failure,” said Jean-Francois Bellis, a lawyer at Van Bael & Bellis in Brussels. But “the fact that such a decision was nevertheless made is reassuring as it shows that not every investigation must necessarily lead to a conviction.”

Raids on Shell, BP, Statoil and price publisher Platts in May 2013 made headlines across the world as regulators warned of possible benchmark-rigging echoing the scandal over manipulation of the London Interbank Offered Rate and foreign exchange markets.

But while the commission suspected wrongdoing, cases where no one owns up to misbehaving in return for leniency are a hard slog for a regulator with finite resources and a growing list of priorities from policing tax loopholes for multinationals to Google’s dominance of the Internet.

‘Cleaning Out’

Vestager is “obviously cleaning out the cupboard to make a fresh start in the New Year,” Mark Powell, a lawyer at White & Case LLP in Brussels, said. “Also, closing down cases that are clearly not going anywhere is the sign of a mature administration.”

Unlike in the Libor-related investigations, where a long line of companies such as Swiss bank UBS Group AG raced to own up to wrongdoing, the oil probe was largely greeted by shrugged shoulders from companies earmarked, who asked “why us?”

The 2013 antitrust raids were “a great surprise to us and we are not aware of what led to the inspection being initiated towards Statoil,” said spokeswoman Elin Isaksen.

“When there is no leniency applicant, the commission’s task is much more difficult and this may explain why a case is not pursued,” said Bellis.

Closing the crude oil part of the case removes the risk of massive fines for companies involved. Almunia, who fined financial firms 1.7 billion euros ($1.85 billion) for Libor manipulation, warned that, if confirmed, oil market abuse may have caused “huge damage to consumers.”

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