BP, Shell raided over alleged price fixing

Source: Supplied

The European Commission has raided the offices of BP, Shell and Norway's Statoil as part of an investigation into alleged price fixing in Europe.

The Commission statement explained that even small distortions of the market could have a ``huge impact on the prices of crude oil, refined oil products and biofuels purchases and sales, potentially harming final consumers''.

In a statement, BP confirmed it "is one of the companies that is subject to an investigation...We are cooperating fully with the investigation and unable to comment further at this time.''

A Shell spokesman said: ``We can confirm that Shell companies are currently assisting the European Commission in an inquiry into trading activities.

Norwegian firm Statoil and Platts, the world's leading oil price reporting agency, also both confirmed they were being investigated.

"The suspected violations are related to the Platts' Market-On-Close (MOC) price assessment process, used to report prices in particular for crude oil, refined oil products and biofuels, and may have been ongoing since 2002,'' said Statoil, which is 67 percent owned by the Norwegian government.

The European Commission said officials "carried out unannounced inspections at the premises of several companies active in and providing services to the crude oil, refined oil products and biofuels sectors.

"These inspections took place in two EU member states,'' a statement said, adding that one country in the European Economic Area (EEA) -- of which Norway is a member -- was also involved.

"The Commission has concerns that the companies may have colluded ... to manipulate the published prices for a number of oil and biofuel products,'' it said.

Additionally, the firms "may have prevented others from participating in the price assessment process, with a view to distorting published prices.''

Motoring groups and politicians in the UK have lined up to voice their anger at the allegations.

David Bizley, technical director of car services company RAC, said the claims were "worrying news for motorists'' and vowed his company would campaign for greater transparency in the UK fuel market.

Shadow energy and climate change secretary Caroline Flint called the reports "very concerning'', which if true, suggested "shocking behaviour'' in the oil market.

"When the allegations of price fixing in the gas market were made, Labour warned that opaque deals and relying on price reporting agencies left the market vulnerable to abuse.

"These latest allegations of price fixing in the oil market raise very similar questions,'' added the Labour MP. "Consumers need to know that the prices they pay for their energy or petrol are fair, transparent and not being manipulated by traders.''

Colleague Chris Leslie said any evidence of price fixing would be "a shocking scandal for our financial markets'' while Conservative MP Robert Halfon repeated his calls for a full investigation into alleged cartels and market manipulation.

"Last year, in a debate that I pressed for, parliament voted unanimously for an investigation into the oil market,'' he explained. "These latest allegations underline why that must happen urgently....High oil prices are crushing families across Britain. Motorists are being taken for a very expensive ride.''

Britain's Office of Fair Trading (OFT) ruled out a probe four months ago, concluding there was ``very limited evidence'' that pump prices were being manipulated.

Former Liberal Democrat treasury spokesman Matthew Oakeshott compared the allegations to the Libor scandal, which resulted in several banks paying out huge settlements over claims they manipulated the key interest rate.

Larry Neal, the president of Platts, rejected similar accusations in a letter to the Financial Times earlier this week. "Your comparison of PRA (price reporting agency) activity to Libor is a false one,'' he said.

"While PRAs do obtain information from 'traders who may have a vested interest in moving the markets,' the agencies do not have any such vested interest,'' he added. ``In contrast, our role is providing market transparency.''

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Vegemite price knifed as bargains spread

The Coles discount campaign is expanding into big-name brands. Source: Supplied

COLES has expanded its "Down Down" campaign to leading branded groceries by slashing the price of Vegemite, corn flakes and Milo.

Coles has cut the cost of a 725g box of Kellogg's Corn Flakes by $1.25 or 24 per cent to $4, a 1.25kg tin of Nestle Milo by $1.85 to $12 and 600g jars of Kraft Vegemite by 99c to $7.

Two sizes of Old El Paso taco kits were cut by as much as 12 per cent.

Another 36 key products were also reduced in price.

That brings the number of shelf items being discounted as part of the Down Down campaign to more than 1400. While many of those are not category leaders - or common buys - the cuts headlining the latest round of reductions to pantry staples should deliver real savings to shoppers.

Nine in 10 people say a family should have Vegemite in the cupboard, while Milo is the second-ranked brand among customers.

The price cuts will be in place for a minimum six months. Such products are usually on sale one in every eight weeks. Coles said its research showed three in four shoppers purchase popular brands when they are discounted. Milo, corn flakes, Vegemite and the Old El Paso kits haven't been this cheap for at least two years.

For Coles and the manufacturers of the discounted groceries, the pay-off is a substantial increase in sales volumes. Coles merchandise director John Durkan said he expected sales jumps of at least 10 per cent.

"I think the customers are going to love it," Mr Durkan said.

Last month, Coles said supermarket prices were down 1.7 per cent on average this financial year.

Supermarket food prices have been falling for about four years, after nearly a decade of rising more quickly than in any other major developed nation.

Coles said that the price cuts were co-funded with manufacturers. Previous rounds of the Down Down campaign have been underwritten almost exclusively by Coles.

A Nestle spokeswoman said it was "supporting our major retailer partners to bring value to Australian shoppers". Kraft did not comment.

It is unlikely that Woolworths will allow its major competitor a win, meaning shoppers at both the major chains are likely to enjoy deeper discounts on key branded shelf items in coming months.

In a move likely to meet a mixed response, Coles last night rolled out a new TV commercial again featuring Status Quo, this time singing reworking their 1979 hit "Whatever You Want".

On Youtube, the three-minute version of Status Quo's "Down Down" has received more "dislikes" than "likes" since its launch last year.

Other price cuts introduced yesterday included 49c or 17 per cent off Adidas roll-on deodorant, now $3.50, and a $2 cut to Fantastic Noodles six-packs, a price reduction of 23 per cent.

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Price check needed on retail shares

Investors in retail shares have enjoyed a wealth windfall over the past year. Source: National Features

INVESTORS have enjoyed a retail bonanza on the sharemarket in the past year.

Woolworths, Wesfarmers, Myer, Harvey Norman, JB Hi-Fi and others have performed better than the broader sharemarket, despite battling the rapid rise of online shopping.A key reason for retail's outperformance, experts say, is because many stocks were coming from a low base after a bad couple of years in a fast-changing retail environment.

The question that new investors now face is whether the retail revolution will deliver good gains in the coming years.

Baker Young Stockbrokers managed portfolio analyst Toby Grimm says retail stocks performed poorly before 2012 because of factors including cautious consumers tightening their belts and the strong Aussie dollar tempting more people to shop online.

"They have bounced back because of the interest rate cuts, and we have seen an improvement in retail sales figures in the last six-to-nine months," he says."The bleeding has stopped and we have started to see green shoots of improvement."

Investors divide the retailers into two camps discretionary retailers such as Myer and David Jones, and the consumer staples giants Woolworths and Wesfarmers, which owns Coles supermarkets along with Bunnings and other brands.

Grimm says Baker Young "avoided discretionary retail stocks like the plague" for much of 2010 and 2011 but had started buying again in 2012, particularly Myer.

He says Woolworths and Wesfarmers are still generating significant dividend yields of 5.5-6 per cent when you take dividend franking credits into account.

The stocks you choose should depend on your risk profile. "Woolworths and Wesfarmers are core plays for any portfolio. As far as the others go, in a reasonably diversified portfolio there probably is good rationale in having exposure to them," Grimm says."I think the Australian retailers have significant benefits ahead if they move online.

"I don't think online is ever going to completely overtake physical stores. Bricks and mortar will remain long-term as the key component of retail."

However, the online retail component is likely to grow from less than 10 per cent today to 20-30 per cent in the next 20 years, Grimm says.

Pitcher Partners wealth management director David Lane says a decade from now, today's retailer will be almost unrecognisable. "Online sales, apps, QR codes, self-serve and other technologies are having a significant impact on retail," he says. "Retailers that thrive will have embraced new technologies to enhance the retail experience and make the purchasing process seamless."

Lane says the industry faces strong headwinds.

"Although there may be short to medium term share price recoveries, retail investors must keep an eye on the future and how well retailers adapt to change."We are still cautious about retailing in general. Our top picks are David Jones, Metcash and Myer."

Myer has been oversold and looks an attractive buy, while DJs is beginning to compete with online retailers through new websites, apps and blogs, Lane says.

Bell Potter Securities private client adviser Andrew Gartrell says retail shares started to rise in anticipation that the Reserve Bank's interest rate cuts would improve sales and profits, "which we are now seeing".

Gartrell says Woolworths and Wesfarmers which hit record highs last week look slightly expensive compared with historical valuations, but should still attract investors who are moving money out of term deposits.

"They are in a defensive sector and still have grossed-up dividends which exceed term deposits," he says. "By contrast the discretionary retailers have much further upside as they have only just started to see an improvement in sales.

"Investors need to understand that discretionary retailers are far more dependent on the economic cycle than the consumer staple stocks like Woolworths and Wesfarmers, and therefore the share prices are more volatile.

"Discretionary retail stocks have better potential for gain if bought at the right time, but also have a greater potential downside in a weakening economy." Bell Potter's top retail share picks are Myer, Super Retail Group and Kathmandu.

View the original article here

Price check needed on retail shares

Investors in retail shares have enjoyed a wealth windfall over the past year. Source: National Features

INVESTORS have enjoyed a retail bonanza on the sharemarket in the past year.

Woolworths, Wesfarmers, Myer, Harvey Norman, JB Hi-Fi and others have performed better than the broader sharemarket, despite battling the rapid rise of online shopping.A key reason for retail's outperformance, experts say, is because many stocks were coming from a low base after a bad couple of years in a fast-changing retail environment.

The question that new investors now face is whether the retail revolution will deliver good gains in the coming years.

Baker Young Stockbrokers managed portfolio analyst Toby Grimm says retail stocks performed poorly before 2012 because of factors including cautious consumers tightening their belts and the strong Aussie dollar tempting more people to shop online.

"They have bounced back because of the interest rate cuts, and we have seen an improvement in retail sales figures in the last six-to-nine months," he says."The bleeding has stopped and we have started to see green shoots of improvement."

Investors divide the retailers into two camps discretionary retailers such as Myer and David Jones, and the consumer staples giants Woolworths and Wesfarmers, which owns Coles supermarkets along with Bunnings and other brands.

Grimm says Baker Young "avoided discretionary retail stocks like the plague" for much of 2010 and 2011 but had started buying again in 2012, particularly Myer.

He says Woolworths and Wesfarmers are still generating significant dividend yields of 5.5-6 per cent when you take dividend franking credits into account.

The stocks you choose should depend on your risk profile. "Woolworths and Wesfarmers are core plays for any portfolio. As far as the others go, in a reasonably diversified portfolio there probably is good rationale in having exposure to them," Grimm says."I think the Australian retailers have significant benefits ahead if they move online.

"I don't think online is ever going to completely overtake physical stores. Bricks and mortar will remain long-term as the key component of retail."

However, the online retail component is likely to grow from less than 10 per cent today to 20-30 per cent in the next 20 years, Grimm says.

Pitcher Partners wealth management director David Lane says a decade from now, today's retailer will be almost unrecognisable. "Online sales, apps, QR codes, self-serve and other technologies are having a significant impact on retail," he says. "Retailers that thrive will have embraced new technologies to enhance the retail experience and make the purchasing process seamless."

Lane says the industry faces strong headwinds.

"Although there may be short to medium term share price recoveries, retail investors must keep an eye on the future and how well retailers adapt to change."We are still cautious about retailing in general. Our top picks are David Jones, Metcash and Myer."

Myer has been oversold and looks an attractive buy, while DJs is beginning to compete with online retailers through new websites, apps and blogs, Lane says.

Bell Potter Securities private client adviser Andrew Gartrell says retail shares started to rise in anticipation that the Reserve Bank's interest rate cuts would improve sales and profits, "which we are now seeing".

Gartrell says Woolworths and Wesfarmers which hit record highs last week look slightly expensive compared with historical valuations, but should still attract investors who are moving money out of term deposits.

"They are in a defensive sector and still have grossed-up dividends which exceed term deposits," he says. "By contrast the discretionary retailers have much further upside as they have only just started to see an improvement in sales.

"Investors need to understand that discretionary retailers are far more dependent on the economic cycle than the consumer staple stocks like Woolworths and Wesfarmers, and therefore the share prices are more volatile.

"Discretionary retail stocks have better potential for gain if bought at the right time, but also have a greater potential downside in a weakening economy." Bell Potter's top retail share picks are Myer, Super Retail Group and Kathmandu.

View the original article here