PROBLEM: Oil Industry in the Philippines

The Philippines oil industry, traditionally, has been dominated by three big refineries: Shell, Petron, and Caltex. In 2000, new oil entrants and LPG refillers filed complaints about the predatory pricing strategies of the Big Three, and favoring their own market refillers. To maintain market share, the Big Three sold petroleum and diesel at a price below average variable cost, which undercuts competition from new players.

Source: Philstar and Venngage, November 30, 2000

3.a - Explain why the news clip implies that the oil industry in 2000 in Philippines was not perfectly competitive.

3.b - Were the three big companies competing fairly with new entrants? What barriers to entry might limit competition and allow the big companies to influence the oil price?