For the past three years, Lord and Aztec, which is headquartered in Bolsover, U.K., has tried to shine a light on what he says is a network of companies spanning from Britain’s old industrial heartland to Lithuania, the United Arab Emirates, Cyprus and Germany. The effort became a crusade and led to very public claims and a formal complaint that Lubriage is importing engine oil and hydraulic fluid and selling at a loss to grab market share in Britain.

Lubriage denies the accusation and says it “is being attacked by a competitor who simply cannot compete on price.” Lord has not “discovered a vast international conspiracy, operating out of Kettering,” Lubriage said in a letter from its lawyer, Kevin Rogers, calling Lord’s calculations “magical thinking.”  

The U.K.’s Trade Remedies Authority thought enough of the allegations to open a formal investigation in June 2024. If the TRA decides engine oils and hydraulic fluids exported from Lithuania and the UAE are being dumped and are damaging U.K. trade, it can recommend duties on these products, although it lacks punitive power. 

“We have fully cooperated with the ongoing TRA investigation, which concerns pricing from two countries we import from,” Lubriage told Lube Report on Wednesday. “We are confident in a positive outcome and are committed to our long-term presence in the U.K.”  

Lord estimates that Lubriage has cost his company customers and £10 million worth of sales over the past year. Other companies claim to have been similarly affected. 

“We saw, and continue to see, numbers that you can’t believe,” Lord told Lube Report. 

Separate Companies

Jevgenij Lyzko, a Lithuanian national, set up Lubriage in 2015. In July 2019, ownership transferred to Mannol Holdings Ltd, of which Lyzko is director and 30% shareholder. His partner is Erik Sudheimer, who holds the remaining 70%. Lubriage Ltd, trading as Mannol, is the exclusive U.K. distributor of Mannol products manufactured by UAB SCT Lubricants and SCT Chemical Trading FZE.

According to multiple online business directories, Erik Sudheimer has had roles at Lubriage’s supplier UAB SCT Lubricants in Lithuania; at UAE-based supplier SCT Chemical Trading FZE; and at SCT Lubricants Ltd, a Cyprus-registered entity that owns the Mannol trademark. The Mannol brand was previously owned by UAB SCT Lubricants and before that Lyzko’s former employer in Germany, Sudheimer Car Technik-Vertriebs GmbH, according to company register information.

Lubriage told Lube Report that Lubriage Ltd, trading as Mannol, is separate from SCT Chemical Trading FZE, UAB SCT Lubricants, SCT Lubricants Ltd and SCT, the German parent company owned by Juri Sudheimer, who has had roles at the aforementioned companies. 

Lubriage’s fortunes changed rapidly after it began trading as Mannol, according to public balance sheets filed with the U.K. government. In 2019, gross profit was £388,000. By 2021, it grew to more than £5 million and in the latest accounts stood at £4.95 million.

As sales grew, so have warehousing requirements. From 2015 until 2021, Lubriage operated from a modest 1,500 square meter unit near Milton Keynes. In March 2021, the company moved to a 6,000 m² warehouse in Northampton. The company relocated to its current 14,250 m² space in Kettering in 2024. According to the same records, from 2019 to 2023, the year-end value of Lubriage’s U.K. inventories rose from £866,785 to £21.2 million. Unpaid customer invoices total £40 million, almost double the value of stock.

Lord’s Concerns

Lord, who has 40 years of experience in the lubricants business, decided to look into Lubriage’s sales activity in 2022, after he discovered the company was offering his customers deals that he thought too good to be true.

“As far as trading in the U.K., they [Lubriage] were always a nuisance,” he said. “They were very cheap, but they weren’t particularly a problem because we could just about compete with them.” Aztec itself has a reputation in the industry for aggressive pricing, something Lord admits. 

According to Lord’s calculations, before 2022, Lubriage was selling products at about 15% above Aztec’s manufactured cost, allowing Aztec to still sell at 5% above Lubriage’s price point. After 2022, Lubriage offered prices at between 25% and 50% below Aztec’s costs, Lord estimated.

Some other U.K. lubricant manufacturers expressed similar concerns about the impacts of Lubriage pricing.

“We should all be under no illusions that it has affected everyone,” said James Holland, managing director of Rotherham-based Granville Oil & Chemicals. Businesses can use things such as quality products, customer service and technical support to compete with competitors offering lower prices, he said, at least to a point. But if price differential becomes too great, it trumps other aspects of an offering.

“We’ve essentially had to abandon an entire sector of customers – the sort of budget end where they are price conscious, where they’re happy to have gaps on their shelves for a few weeks because of no deliveries or they’re happy to have some complaints over quality,” he said.

Others have chosen to voice their opinions in submissions to the TRA. One wrote that it is “virtually impossible … to purchase virgin materials and sell like-for-like goods without significant loss on the cost of raw materials.” Another company said it was “unable to compete with the products specified in this investigation being sold substantially below our manufacturing cost.”

Morris Lubricants, like Aztec, allowed the TRA to audit its books to gather data about the industry and formulate a more complete picture.

“Our primary interest in this investigation is to ensure the protection and sustainability of the U.K. lubricants industry,” Andrew Goddard, the executive director of Shrewsbury-based Morris Lubricants, told Lube Report. “Ensuring that it remains an equal, fair, competitive market that is protected against any unfair trade practices.”

The United Kingdom Lubricants Association, the country’s trade lobby, was initially involved in raising awareness among members. UKLA Director General David Wright said product dumping, if it is occurring, affects the whole sector, yet, “I think it would be wrong to distill the investigation down to just two companies,” he said, meaning Aztec and Morris. 

E-commerce

The Aztec team found several items for sale on e-commerce site Amazon that appeared to sell at a loss. Lubriage is a first-party retailer, meaning Amazon buys products wholesale from it.    

During the TRA investigation’s period of interest – April 1, 2023, to March 31, 2024 – Lubriage, trading as Mannol, offered 5-liter containers of its 5W-30 synthetic engine oil on Amazon for an average of £16.23 per unit, according to data retrieved by Aztec from Jungle Scout, a business-to-business platform for Amazon retailers.

The platform also indicated that Amazon took an average fulfillment fee of £9.63 and that the UK’s value added tax claimed £1.14 per unit. Aztec estimated shipping costs and duties to total £1.06 per unit, and Lord’s Argus presentation included what he claimed to be a March 2024 invoice from SCT Chemical Trading FZE stating that Lubriage paid £8.63 per unit for the Mannol synthetic oil.

If representative of costs incurred on that product, these numbers imply a loss of around £4 per unit, even without accounting for administrative, selling and general costs. Sales of this product on Amazon were more than 37,000 units in the past 12 months, according to Jungle Scout.

Conducting the same exercise for other Mannol products sold on Amazon yields similar results. Jungle Scout showed 2,396 units of Classic 10W-40 engine oil sold during the year ended March 31, 2024 at an average price of £54.38. The same invoice and estimates cited above sum to costs of £69.88 per unit. Jungle Scout indicates 1,590 units of 20-liter containers of Mannol Energy Premium 5W-30 sold during the period at an average price of £45.46, compared to a cost estimate of £53.81, again without accounting for administrative, selling and general expenses. 

Mannol oils are the top three best-selling products in that class on Amazon, ahead of Castrol, according to Jungle Scout.  

Lord provided another invoice from March 2024 for 1,000-liter IBCs of hydraulic fluid sold to a Lubriage customer in Ireland for $822.28 per unit. The invoice in the Argus presentation showed Lubriage paid SCT $1,350 per unit.

“We do not accept any of the figures put forward by a party who is not privy to what we pay to whom,” said Lubriage via its lawyer.

Lubriage does not disclose sales volumes, but Lord contends that the growth of the company’s business is reflected in data about U.K. finished lubricant imports from Lithuania and the UAE, the two countries where SCT operates lube manufacturing plants. In 2019, passenger car motor oil and hydraulic fluid imports from Lithuania amounted to 1,090 metric tons, according to U.K. government trade statistics. By the end of 2024, that number had more than quadrupled to 4,595 tons. Over the same period, imports of the same products from the UAE rose more than 90 fold from 307 tons to 28,572 tons.

Lubriage said in a public document sent to the TRA that it imported between 4,000 tons and 5,500 tons of products in question from UAB SCT Lubricants during the period of interest. The company did not comment publicly to the authority about its imports from the UAE, but Lord and Holland contend that no more than a few other U.K. companies import lubes from there and that their total sales are far less than Lubriage’s.

Current demand for U.K.-manufactured engine and hydraulic oil is around 220,000 tons per year, according to figures collated by Aztec from market research firm Kline & Co. and other sources. 

Innovation Claims

In the letter from its lawyer, Lubriage described its business model as being straightforward – it buys in bulk, at good prices, has facilities in which to store those goods and that it minimizes shipping costs, for example, by manufacturing plastic bottles onsite in the UAE. 

“Prices fluctuate in this sector, as you no doubt appreciate,” Rogers said.

Lubriage told the TRA that selling products at a loss is both legal and normal business practice. Offering “loss leaders,” or selling products at prices meant to grab customer attention to expose them to other products that are being sold for profit is one example. One of TRA’s criteria for determining if products are being dumped is whether the volume of products being sold at a loss constitute more than 5% of a market by volume. Lubriage insists that it has remained under that threshold.

“A U.K. company can sell product at any price it wishes,” Lubriage told the TRA. “What matters is what Lubriage pays for their product. The TRA does not exist to prevent ‘loss leaders.’ ”

Lubriage said it declines to share cost or other sensitive information with the TRA or media, but it refuted the numbers in the price-cost analyses in this article, without offering alternatives. Through its lawyer, the company also argued it is an innovator that benefits the market rather than harming it.

“Lubriage Ltd, the U.K. and [Ireland] distributor for Mannol products, has experienced sustained growth, though we remain a smaller player in the market,” Rogers said. “We are committed to offering quality products at competitive prices to our distributors and customers.

“Every supermarket in the land played a part in the demise of the corner shop, and many supermarkets offer loss leaders, some products with higher profit, some with less. That does not mean that corner shops can cry foul. Old models have no absolute right to continue to exist, yet there is room for everyone to reinvent and compete.”

Another Cost Estimate

The previously mentioned 5-liter bottle of Mannol 5W-30 sold on Amazon is labeled as meeting the American Petroleum Institute’s API CH-4 and the European Automobile Manufacturers Association’s ACEA A3/B4 performance specifications and is described as “fully synthetic.” As defined by industry standard, synthetic lubricants contain Group III base oils or some other type of synthetic base stock, which typically cost more than Group III.

However, products meeting API CH-4 – which was originally written for model year 1998 diesel-powered trucks and declared obsolete in 2009 – can be made with Group I base oils, which cost significantly less.

Group I oils exported from Russia are selling at large discounts in the UAE today. According to Ray Masson, who reports about base oil markets for Lubes’n’Greases, Russian solvent neutral 150 and SN500 are selling last week for between $645 per ton and $695/t, on a CIF or CFR basis ex Hamriyah port. The mid-point of that range would convert to $0.60 per liter or a cost of about £2.50 just for the base stock in a 5-liter container.

Masson estimated that a basic automotive engine oil additive package available in the UAE could add about $185/t to the cost of the finished lubricant, or around £0.83 for five liters. Adding in the same Amazon fee and VAT, shipping and duty fees as above yields estimated costs of £15.12 for SCT and Lubriage, not including administrative, selling and general costs in the U.K. or the UAE and likewise not including manufacturing costs in the UAE. Again, this compares to the Amazon advertised price of £16.23.

Lubriage stated that SCT does not use Russian base oils. Based on Masson’s reporting, that would probably raise base oil procurement cost since UAE prices for Group I oils from other sources was said this week to range from $895/t to $955/t for SN150 and SN500, again on a CIF or CFR basis, ex UAE ports. The more expensive base oils would raise the estimated cost for SCT and Lubriage to £15.83 per 5-liter bottle.

Audit

Shah & Co, the independent auditor of Lubriage’s year-end 2023 accounts wrote a disclaimer in its assessment that, among other things, it could not verify the amount of inventory nor confirm where cash was going. Consequently, it could not identify unusual patterns or fictitious transactions or ensure money was deposited in company accounts.

“We have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements,” it wrote. Shah & Co declined to comment for this article.

Granville Oil’s Holland believes the problem of dumping isn’t confined to the U.K., although he thinks the country’s relaxed regulations could have contributed to its prevalence.

“It is spreading,” he said. “Talking to some of our German colleagues, they’re seeing it almost as an epidemic growing over there. But they’re perhaps 18 months, two years behind where we are.”

Holland expects the TRA will find dumping has been occurring, but he worries that tariffs the authority might impose on the UAE could be circumvented by finding a new export source, such as Saudi Arabia. The final TRA recommendations are due in October. Until then, Lord said, “I’m fighting for my company and my industry.”