ACCC flags concerns on BP Woolworths Petrol buyout

ACCC flags concerns on BP Woolworths Petrol buyout
Australia’s competition watchdog says it is concerned about BP’s plans to buy supermarket giant Woolworths’ petrol stations, saying it would reduce competition.

The ACCC is in effect flagging that it might block the $1.8 billion deal.

BP plans to acquire, rebrand and operate Woolworths’ existing 527 fuel and convenience sites across Australia, as well as an additional 16 sites under construction, adding to BP’s existing network of approximately 350 company-owned retail sites across Australia.

The Australian Competition and Consumer Commission said the acquisition would cut the number of competitors selling petrol and that would reduce the incentive to keep fuel prices low.

“The transaction would reduce the number of major rivals in fuel retailing. 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 the ACCC’s preliminary examination of the buyout.

“Woolworths appears to influence retail market fuel prices by either leading price reductions, or quickly following other retailers that reduce prices, especially in the downwards phase of metropolitan price cycles.

“The proposed acquisition removes Woolworths’ influence on metropolitan markets and we are concerned that BP would not follow Woolworths’ pricing strategy. Competition may become softer, costing consumers.”

After receiving submissions from industry associations, fuel retailers, wholesale fuel suppliers, and both corporate and individual consumers, Mr Sims said the deal could also have an impact on convenience groceries.

“This is another part of the transaction that requires examination to see what the likely impact would be on competition, and prices,” Mr Sims said.

BP said it believed the issues could be addressed.

“We are confident we can work with the ACCC to address the issues they have raised and we look forward to obtaining clearance at the end of this process,” BP Australia president Andy Holmes said.
“We believe that Australian retail fuel and convenience markets are highly competitive and will remain so following the completion of the transaction.”

The ACCC will be handing down its decision on the buyout on October 26.

 



An award winning author and journalist, commentator, lecturer, and speaker, Leon is a freelance business journalist who covers a range of areas including politics, strategy, globalization, leadership and all the big trends ahead. His main skill is summing up all the news that’s around. For the last 30 years, his main focus has been on management issues. He also produces two podcasts for RMIT University, Talking Business and Talking Technology. Leon has worked for Fairfax, News Limited, AAP and the Herald and Weekly Times.