NEW YORK, June 24 (Reuters) - The U.S Federal TradeCommission has followed the European Union in opening a formalprobe into how crude oil and refined fuel prices are set,Bloomberg News reported on Monday.
It said the investigation was in a preliminary stage, butwould likely broaden. The FTC is reviewing the progress ofEuropean authorities and has agreed with the Department ofJustice's antitrust division to handle the probe, Bloombergreported, citing two people familiar with the matter.
The FTC has conducted several inquiries into U.S. oil pricesover the past few years and is often called on to investigatepossible price-fixing when prices surge. But the agency hasgenerally found that market forces such as China's growingdemand or a refinery shutdown are to blame.
Those investigations have also typically been focused onmarket fundamentals rather than the mechanics of settingbenchmark prices, a process that is under increased scrutinyfollowing revelations that some of the world's biggest bankshave been rigging the Libor interest rate benchmark.
A spokesman for the FTC declined to comment.
The probe comes more than a month after European authoritiesraided the offices of Royal Dutch Shell Plc, BP Plc and Statoil ASA to investigate suspectedmanipulation. They also visited price publisher Platts, a unitof McGraw-Hill Financial Inc, whose daily priceassessments 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 marketfunctions effectively, spokeswoman Kathleen Tanzy said.
News that Washington has taken up the investigation mightcome as little surprise given growing trans-Atlantic enquiriesand the sharp focus on financial benchmarks globally.
The fact that the FTC, not the Justice Department, isleading the enquiry suggests any charges that result might notbe criminal in nature, Bloomberg reported.
Platts oil prices are widely used in the United States asbenchmarks for long-term contracts or derivative trades, and aregenerally set using a market-on-close (MOC) system similar to Europe's, during which a series of bids, offers and trades in ahalf-hour period are used to establish prevailing prices.
Other independently owned price reporting agencies (PRAs),including Argus and OPIS, are also used as benchmarks in certainmarkets.
Platts is in the process of implementing a set of proposalsput forward by an International Organisation of SecuritiesCommissions (IOSCO) study that laid out recommended bestpractices for PRAs, and will have those verified by an externalauditor by October, Tanzy said.
Thomson Reuters Corp, parent of Reuters news,competes with Platts in providing news and information to theoil market.
