By America Hernandez PARIS, April 15 (Reuters) - France's proposal to cap profit margins on transport fuels sold throughout the country's service stations prompted an immediate backlash from the
French Fuel Margin Cap Proposal Sparks Strong Industry Opposition
By America Hernandez
French Government's Fuel Margin Cap and Industry Response
Background of the Proposal
PARIS, April 15 (Reuters) - France's proposal to cap profit margins on transport fuels sold throughout the country's service stations prompted an immediate backlash from the distribution industry, according to a lobbying letter seen by Reuters on Wednesday.
The French government said on Tuesday it had submitted for consultation a draft decree that would fix prices to ensure fuel distributors did not earn margins higher than those seen in January and February, based on a sliding five-day average of wholesale prices at Rotterdam.
European Context
It is one of a host of measures European countries are considering from Dublin to Bucharest to ease consumer pain from record high oil and fuel prices due to disruptions caused by the war in Iran.
Industry Backlash and Arguments
Concerns Raised by Distributors
In a letter to the prime minister dated April 14, France's Federation of Commerce and Distribution (FCD) argued the decree would force distributors operating on margins of 1 to 2 eurocents per litre to sell at a loss due to the lack of real-time price updates — and leave untouched the vertically integrated oil companies who they say are earning much larger profits from the crisis.
Signatories and Industry Representation
The letter, which has not been made public, was signed by Carrefour CEO Alexandre Bompard, Cooperative U CEO Dominique Schelcher, Mouvement E. Leclerc Executive Committee Chair Philippe Michaud, Groupement Les Mousquetaires President Thierry Cotillard, and Barthelemy Guislain, president of the Mulliez Family Association, which owns the Auchan supermarket chain.
Together the five companies represent more than a third of France's service stations, according to Reuters calculations.
Criticism of the Decree
"This decree would make large distribution chains the convenient variable of adjustment of a crisis it has not created... while imposing absolutely nothing on the refiner-distributors who have captured considerable gross margins since the beginning of the conflict in Iran," the letter reads.
Major Oil Companies and Market Impact
TotalEnergies' Position
Though not named in the letter, French oil major TotalEnergies owns three of France's six oil refineries and a quarter of the country's service stations.
Expected Profits and Company Response
TotalEnergies is expected to announce significant trading profits on Thursday in its first-quarter earnings snapshot from rising oil prices and higher refining margins.
TotalEnergies declined to comment on the letter, but said it was the only distributor in France to voluntarily cap prices at the pump.
Other Market Players
Canadian energy group North Atlantic also recently acquired the French Esso refinery in Gravenchon, which supplies about 7% of French fuel stations.
(Reporting by Forrest Crellin and America Hernandez; Editing by Inti Landauro and Makini Brice)
