Jet fuel supplier fined VND3 billion for monopoly abuse

Monopoly fuel supplier Vietnam Air Petrol Company has been fined VND3 billion (US$168,300) for cutting off supplies to Jetstar Pacific Airlines without justification on April 1 last year.

The Vietnam Competition Council said at a public hearing Tuesday the petrol company, known better as Vinapco, had abused its monopoly position and flouted the Law of Competition. A senior official of the council, who wished to be unnamed, told Thanh Nien that Vinapco had imposed unfavorable business conditions on its customer since it is aware that commercial airlines cannot turn to another source of supply in the country. The penalty was only cautionary, not punitive, because this was its first violation, another council member said. Vinapco, an affiliate of state-owned Vietnam Airlines, stopped supplying fuel to the Jetstar Pacific fleet on April 1, 2008 as the two sides were arguing over a price increase. The delay grounded 30 flights supposed to carry some 5,000 passengers. The government ordered Vinapco to resume supply, ending the impasse. The carrier said at the time that Vinapco had contracted to charge VND593,000 for a ton of aviation fuel for the whole year. But less than three months after the deal, Vinapco demanded VND750,000. Vinapco said it needed to increase fuel costs to cover the skyrocketing world oil prices, which went past $100 a barrel at that time. When the dispute broke out, Jetstar Pacific was known as Pacific Airlines. The domestic carrier later transformed into the low-cost Jetstar Pacific in May 2008 under an agreement with Australia’s Jetstar Airways. At the hearing on Tuesday the budget airline called for separating Vinapco from its rival Vietnam Airlines. The Vietnam Competition Council said it would forward the proposal to official agencies and tighten control over monopoly services. Vinapco has 30 days to appeal Tuesday’s ruling, which is also the first anticompetitive ruling the Vietnam Competition Council has made. Reported by Xuan Danh