Regulator Raises Concerns over BP, Woolworths Gas-Station Deal--Update
August 09 2017 - 7:50PM
Dow Jones News
By Robb M. Stewart
MELBOURNE, Australia--Australia's antitrust regulator has
flagged concerns over BP PLC's (BP) planned acquisition of a
network of gas stations across Australia, which it said has the
potential to reduce competition in metropolitan areas substantially
.
In an outline of its preliminary view on the proposed deal, the
Australian Competition and Consumer Commission said Thursday the
acquisition by BP of retailer Woolworths Ltd.'s (WOW.AU) service
stations would reduce the number of big companies offering
fuel.
"The transaction could see retailers face less competitive
pressure to keep their prices low and as a result, motorists may
end up paying more at the pump," ACCC Chairman Rod Sims said.
In a brief statement, Woolworths said it would work with BP and
the regulator to advance the clearance process for the planned
deal.
At the end of last year, Woolworths entered a binding agreement
to sell its 527 gas stations and 16 development sites to BP for
1.79 billion Australian dollars (US$1.41 billion), aiming to use
the proceeds to bolster its balance sheet and reinvest in its core
operations. The deal was a blow to Caltex Australia Ltd. (CTX.AU),
the existing fuel supplier to Woolworths' outlets.
The regulator noted that BP already supplies fuel to about 1,400
branded service stations throughout Australia, and also refines and
supplies fuel wholesale to a number of independent retailers that
own and operate gas stations, including some under the BP
brand.
The regulator's final decision on the acquisition is expected on
Oct. 26 and it is seeking feedback from interested parties.
Mr. Sims said that the proposed acquisition would remove
Woolworths' influence in metropolitan markets and the regulator is
concerned BP wouldn't follow Woolworths' pricing strategy. The
retailer appears to influence retail market fuel prices by either
leading price reductions or quickly following moves by others, he
said.
Mr. Sims said it was a complex transaction, and in addition to
the impact on metropolitan areas the ACCC needed to concern
hundreds of local areas, each with unique competitive dynamics and
features. The regulator also needed to examine the likely impact on
convenience-store groceries, he added.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
August 09, 2017 20:35 ET (00:35 GMT)
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