Sinopec, CNPC deny price alliance

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China National Petroleum Corporation (CNPC) and China Petrochemical Corporation (Sinopec Group), the country's two oil giants, have allegedly collaborated on price manipulation in some areas, Chinese media reported Thursday.

Beijing Business Today reported Thursday that there is a price deal between the two oil giants, which would allow CNPC gas stations to sell gasoline at a discount price in areas where Sinopec has a stronger presence, and Sinopec would not react by also offering a discount, and vice versa.

And the report said that the deal is to guarantee enough competition, citing an unnamed source from CNPC.

But CNPC denied the existence of a price alliance with the Global Times Thursday on a call to the company, saying that a price alliance like that would be monopoly behavior.

And Sinopec was not available for comment Thursday.

According to the report, Beijing is part of Sinopec's territory, and Sinopec has been offering gasoline at 7.45 yuan ($1.13) per liter, which is the ceiling price set up by the country's top planning body about two weeks ago.

But in the same period, CNPC's Beijing gas stations have been offering a discount ranging from 0.15 yuan (0.02) to 0.4 yuan ($0.06).

But calls to gas stations in Beijing Thursday proved that price reductions by CNPC ended days ago, and currently the CNPC is also selling the gasoline for 7.45 yuan ($1.13) per liter in Beijing.

Huang Shunjing, vice president for, an oil industry website, told the Global Times that offering discounts is very common among gas stations in order to gain repeat customers, and this cannot prove a price alliance exists.

And Huang said that the two oil giants usually adopt similar price strategies throughout the country — if one of them raised the price, the other one will also follow suit.

"No fierce competition seems to exist between the two companies. One will not keep down the price to gain customers when the other one is raising the price," said Huang.

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