UPDATE 2-U.S. FTC opens oil pricing probe, following EU -Bloomberg

Mon Jun 24, 2013 3:24pm EDT
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NEW YORK, June 24 (Reuters) - The U.S Federal Trade Commission has followed the European Union in opening a formal probe into how crude oil and refined fuel prices are set, Bloomberg News reported on Monday.

It said the investigation was in a preliminary stage, but would likely broaden. The FTC is reviewing the progress of European authorities and has agreed with the Department of Justice's antitrust division to handle the probe, Bloomberg reported, citing two people familiar with the matter.

The FTC has conducted several inquiries into U.S. oil prices over the past few years and is often called on to investigate possible price-fixing when prices surge. But the agency has generally found that market forces such as China's growing demand or a refinery shutdown are to blame.

Those investigations have also typically been focused on market fundamentals rather than the mechanics of setting benchmark prices, a process that is under increased scrutiny following revelations that some of the world's biggest banks have been rigging the Libor interest rate benchmark.

A spokesman for the FTC declined to comment.

The probe comes more than a month after European authorities raided the offices of Royal Dutch Shell Plc, BP Plc and Statoil ASA to investigate suspected manipulation. They also visited price publisher Platts, a unit of McGraw-Hill Financial Inc, whose daily price assessments are widely used as a benchmark in oil markets.

Platts has not been contacted by the FTC, but is ready to "fully cooperate" with regulators to ensure the oil market functions effectively, spokeswoman Kathleen Tanzy said.

News that Washington has taken up the investigation might come as little surprise given growing trans-Atlantic enquiries and the sharp focus on financial benchmarks globally.   Continued...