Anti-Competitive Energy Giants Have Hijacked Moroccan Oil Market

At long last, the Competition Council (CC) has rendered its verdict on the potential collusion within Morocco’s oil sector. The involved companies, having been formally notified of the accusations, have opted to settle according to the procedure outlined in Article 37 of Law 104-12.

With the companies set to pay a combined fine of only MAD 1.84 billion, it remains unclear whether the Council’s decision will really help deter Morocco’s oil giants from holding the country hostage to their speculative interests and agendas.

The CC’s scrutiny targeted nine companies in total, with four among them dominating a significant two-thirds of Morocco’s oil market share, namely Afriquia, Vivo Energy (Shell), TotalEnergies, and Petrom. Alongside their professional association, these companies are now mandated to collectively settle the substantial MAD 1.84 billion fine.

What charges did the general rapporteur of the CC level against them? In essence, the allegations encompass anti-competitive behaviors such as restricting market entry or hindering fair competition, manipulating pricing by artificially influencing their increase or decrease, and dividing markets, supply sources, or public markets.

Given the pivotal role of the fuel distribution sector in the economy and the ripple effect of price hikes on the prices of other products, these accusations carry substantial implications for the economy, social peace, ethics, morality, and politics.

These Moroccan companies, with only one being listed on the stock exchange, are collectively facing a payment of 1.84 billion MAD, without a detailed explanation of the arithmetic operations leading to this amount.

In July 2020, in the midst of the infamous turmoil involving the CC and two letters addressed to King Muhammad VI, the initial decision was for three of these businesses to pay 9% of their sales first, and less for the others, and then 8% of sales for all businesses.

At the time, members of the CC had approached the Head of State to condemn the conduct of their then president, Driss Guerraoui, who was accused of acting on orders. While we may never know more about this, we are within our rights to seek out alternative perspectives that may help illuminate the case.

Following the July 2020 controversy, King Mohammed formed a special committee whose work culminated in the appointment of Ahmed Rahhou to replace Driss Guerraoui in March 2021. This signaled the beginning of a protracted narrative that included changes to competition laws and regulations, as well as adjustments to its council.

What then followed was a set of rapidly accelerating development, with the CC Rapporteur reaffirming in 2022 the statements made by the Parliament in 2018 and by the CC itself in 2020.

Following the initial scandal in 2018, the past five years have essentially been a hectic period of back and forth, twists and turns, dismissals and recoveries, denunciations and discreet denunciations… And so here we are again — with the case closed but the initial issue far from over or adequately dealt with.

The oil companies, after facing a penalty of nearly 2 billion MAD (around 198,770,940 Dollars) , cannot be said to have suffered any substantial, let alone overwhelming loss of revenues. Instead,they still continue to make substantial, head-spinning profits from their collusion while essentially dominating or even controlling Morocco’s energy market.

At this stage, several questions are in order. One question is, if the MAD 2 billion fine really corresponds to the recommended percentages of 8 and 9% in 2020, why did Driss Guerraoui leave and who are the members who complained about him to the King in July 2020?

The other question is: if there is a significant difference between the two fines in 2020 and 2023, the public that pays for fuel and all the other products whose prices have skyrocketed due to this proven collusion has the right to know. And it is the duty of the country’s judiciary to get involved and hold all the actors of this scheme accountable!

Yet, there remains the second part of the CC’s statement, which specifies “the commitment to a series of behavioral commitments to which these companies and their professional organization have adhered, in order to improve the competitive functioning of the hydrocarbon market in the future, preventing the risks of infringement of competition to the benefit of consumers.”

This is followed by a lengthy technical jargon from which it is understood that the CC will monitor and ensure the compliance of these commitments by the nine companies.

We are thus left with yet another question: How will the CC be able to “rein in” companies that, by their own admission, tempered with prices, thus illegally regulating the market and hindering free competition? How will the CC manage to implement its latest ruling given that, despite all the resources at its disposal (human, regulatory, technical, legal, fiscal…), it essentially failed to satisfactorily monitor or control the Moroccan energy market from 2015 to 2018?

The time it took to close this case proves that, in a country like Morocco, which we are told is highly ranked in the Corruption index, morality and the ethics of respect for rules vanish when it comes to dealing with vast sums of money.

How, then, is the CC supposed to control a sector where prices are highly volatile and which offers the possibility of buying oil from countries under sanctions and reselling it at a higher price in Morocco, thanks to a dense fog of shell companies (as revealed by the Wall Street Journal a few months ago)?

Remember Abdelilah Benkirane and the late Mohamed Louafa, who complained that it was impossible to verify the quantities of imported oil declared by operators to the Caisse de Compensation? Should we trust them?

Remember Abdelilah Benkirane and the late Mohamed Louafa? They complained that it was impossible to verify the quantities of imported oil declared by operators to the Caisse de Compensation? Should we trust them?

In its statement, the CC conspicuously avoided any mention of oil refining and the struggling Samir refinery in Mohammedia. This is noteworthy considering the CC’s 2022 opinion, where it expressed an inability to decide on the resumption of the Samir oil refinery ’s activity due to insufficient data.

Indeed, the CC urged the government to “urgently commission a comprehensive economic and technical study capable of providing precise answers by integrating the developments in this activity in the global market.”

Nevertheless, as expected, the government, headed by former oil industry tycoon Aziz Akhannouch, a shareholder in the largest market share company in the sector, has not initiated any such commissioning. If anything, this episode has raised with painful sharpness the challenge of moralizing Moroccan public life.

What, indeed, should one expect from the government’s pledge to monitor an industry when the former Minister of Agriculture and current Head of Government has a majority shareholding in the sector’s leading company? In any self-respecting country, public opinion would have already demanded his resignation and he would have at least been compelled to justify his actions. Or isn’t Morocco a self-respecting country governed by the rule of law?

In the end, the decision of the CC, which is willingly accepted by the companies that are guilty of cartelisation and want to end it, only ends the first act of anti-competitive behavior. But the conflict of interests, the greed for profit, the impunity or the light and belated punishment are still there. And the primary victim of this scheme is the rule of law.