BP blocked from Woolworths service station takeover by ACCC

Cornelia Mascio
Dicembre 14, 2017

Australia's consumer watchdog announced it will oppose BP Australia's proposed acquisition of Woolworths' (ASX:WOW) network of more than 500 retail service stations, due to concerns that motorists would end up paying more. Many consumers seeking out cheaper petrol will head to Woolworths petrol stations.

BP and Woolworths, which wants to exit the business to focus on its supermarkets, said they were disappointed by the decision after months of talks with the Australian Competition and Consumer Commission and were reviewing what to do next.

It had planned to acquire the 531 service stations now operated by Woolworths to add to that network.

"More important, perhaps, is that BP increases its prices more quickly in the up phase of the fuel price cycle and is slower to discount". BP supplies fuel to 1,400 BP-branded service stations throughout Australia, setting fuel prices at about 350 of them.

"Competition in the Queensland fuel market is already weaker than other markets, so a BP takeover would only exacerbate this problem", she said.

Mr Sims said the acquisition would have a "major impact" on motorists and likely affect metropolitan price cycles by making the price jumps quicker, larger and more co-ordinated.

"We remain confident that, with appropriate divestments as offered by BP, this transaction would not substantially lessen competition".

The Woolworths-BP acquisition deal has been in the works for more than a year.

However, Mr Sims said the difference in prices between Woolworths and BP could be even bigger at certain times in certain areas.

Nearly a year ago, the supermarket chain Woolworths closed a $1.785 billion deal to sell its fuel business to BP.

I'm not the only one bullish on the fuel retailer.

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