Linfox can buy Aurizon’s Queensland intermodal business: ACCC

The ACCC has acknowledged Aurizon’s sale of its Queensland intermodal business to Linfox.
The ACCC has considered the Linfox proposal, and has decided that a public review of the transaction is not required, as it does not consider the acquisition by Linfox will give rise to a substantial lessening of competition.
“Linfox’s operations in Queensland are relatively limited, and the transaction will mean there will remain two intermodal rail line-haul providers in Queensland, which is a good outcome for rail competition and Queenslanders,” ACCC chairman Rod Sims said.
Aurizon had previously announced that it would shut the Queensland intermodal business if it couldn’t progress the earlier transaction proposal involving Pacific National.
Under the earlier transaction proposal, it planned to sell the rail component of the Queensland intermodal rail business to Pacific National, its only competitor in intermodal rail in Queensland.
“The ACCC did not consider that Aurizon’s shut-down plans were rational given there were other options,” Mr Sims said.
“The sale of the Queensland intermodal business demonstrates why the ACCC must always question claims that businesses will be shut if we don’t approve a merger.”
The ACCC litigation concerning the sale of Acacia Ridge Rail Terminal to Pacific National and Aurizon’s intermodal sale process is continuing.
 

Siemens, Alstom rail merger troubles the ACCC

The ACCC has expressed preliminary concerns about the proposed merger of Siemens A.G.’s (Siemens) Mobility Division with Alstom S.A. (Alstom), which are detailed in a Statement of Issues published today.
“A combined Siemens-Alstom would be by far the largest supplier of heavy rail signalling in Australia,” ACCC chairman Rod Sims said.
The ACCC’s review has focused on signalling systems for heavy rail passenger networks, particularly train interlocking systems and automatic train protection (ATP) systems. Signalling systems provide safety and traffic management controls on rail networks. Interlockings are the core of a signalling system; they set routes for the safe movement of trains across railway lines. Train protection systems ensure that trains comply with movement authorities issued by the interlockings.
“The ACCC’s preliminary view is that the proposed merger may substantially lessen competition in the supply of heavy rail signalling systems for passenger rail networks in Australia, in particular interlocking systems and ATP systems. The loss of competition could result in increased prices for customers, or lower levels of service, quality, or innovation,” Mr Sims said.
“We have heard from many industry participants who have expressed competition concerns with the merger. We will continue to evaluate the competitive options available to passenger rail networks in Australia.”
The proposed merger is also being reviewed by overseas competition regulators, including the European Commission.
“The ACCC is liaising closely with overseas competition regulators, as some of these potential competition issues may also arise in other countries,” Mr Sims said.
The ACCC has invited further submissions from interested parties in response to the Statement of Issues by 20 September 2018. The ACCC’s final decision is due on 29 November 2018.
Background
Siemens is a listed German conglomerate headquartered in Munich. Its Mobility Division is one of eleven business divisions. Siemens acquired signalling supplier Invensys Rail in 2013 and Perth-based MRX Technologies in 2017.
Alstom is a French société anonyme listed on the Euronext Paris stock exchange. In 2015, Alstom acquired GE’s signalling business.
Siemens and Alstom are both active in the rail mobility industry globally and each supplies rail signalling systems, rolling stock and rail electrification services in Australia. The key area of overlap between the parties in Australia is in the supply of rail signalling systems.

Fuel prices hit four-year high as retailers boost margins

Average petrol prices increased by seven per cent in the past three months, hitting a four-year high in real terms of around 145 cents per litre (cpl) in Australia’s largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth), according to the ACCC’s latest petrol monitoring report.
Annual average prices in the five largest cities in real terms steadily fell between the 2013-14 and 2016-17 financial years. However, in 2017-18 the average price of petrol increased overall by nearly 10 per cent compared with the previous year.
“The major factors driving higher prices were an increase in international crude oil and refined petrol prices, and a lower AUD-USD exchange rate,” ACCC chairman Rod Sims said.
“The OPEC cartel in particular continues to have a damaging effect on Australian petrol prices. In late-2016 OPEC, and some other crude oil producing countries, agreed to cut production. This restricted supply into the market, which has clearly started to bite through steadily increasing petrol prices in the past financial year.
“A weaker Aussie dollar has also increased costs for wholesalers buying petrol for the Australian market, which flows through to consumers who pay for this at the pump,” Mr Sims said.
While higher global oil prices are the major factor, the ACCC report also shows that the gross margins Australian petrol retailers are obtaining for every litre sold are also adding to the price pressure motorists experience. Average gross retail margins hit a record high in 2017-18. Annual average gross indicative retail differences (GIRDs), a broad indicator of gross retail margins, in the five largest cities in 2017-18 were 12.4 cpl. This is 4.3 cpl higher than the average in real terms over the last 16 years.
“Current gross retail margins in the five largest cities are now over 50 per cent above the 16 year average since the ACCC began tracking this data,” Mr Sims said.
Brisbane motorists continue to pay the highest price for petrol of the five major cities. This continues a trend that has seen Brisbane prices being the highest of the five major cities for 18 of the past 24 months.
Regional petrol prices
The average differential between prices in the regional locations the ACCC monitors and the five largest cities fell by 1.0 cpl in 2017-18, compared with 2016-17. However, motorists in these regional locations were still paying an average of 4.4 cpl more for their petrol in 2017-18.
The ACCC has undertaken four regional petrol market studies in Darwin, Launceston, Armidale and Cairns and continues to monitor prices and margins in these locations.
“In all these locations, gross retail margins and prices continue to remain high. However it’s worth noting that prices in Cairns, while still high, are getting more competitive. This correlates with more vigorous competition following independent retailer United increasing its presence in the Cairns area,” Mr Sims said.
“This example demonstrates the value for consumers of having competition in petrol markets.”
Background
The ACCC collects retail petrol prices for all capital cities and over 190 regional locations across Australia.
On 20 December 2017, the Treasurer issued a new direction to the ACCC to monitor the prices, costs and profits relating to the supply of petroleum products and related services in the petroleum industry in Australia.
Under the new direction, the ACCC produces quarterly petrol monitoring reports focusing on price movements in the capital cities and over 190 regional locations across Australia. It also produces industry reports that focus on particular aspects of consumer interest in the fuel market in relation to prices, costs and profits. Today’s report was the fourth issued under the direction.
Gross retail margins are the difference between average retail prices and average wholesale prices. As they do not include costs, gross retail margins should not be confused with actual retail profits. These margins are averages across the five largest cities over time. The level of prices, costs and profits vary significantly between retail operations and not all petrol retailing sites will be achieving these margins. Some will be achieving higher margins, others lower.

Annual average GIRDs in the five largest cities in real terms: 2002-03 to 2017-18. The analysis about savings from price cycles was not undertaken for Perth because it has regular weekly price cycles.

Aurizon must carry on with intermodal business: ACCC

The Federal Court has ordered that Aurizon must continue operating its Queensland intermodal business while the ACCC’s case against Pacific National and Aurizon is heard and determined.
The ACCC instituted proceedings in July this year against Pacific National and Aurizon, and their related entities, for allegedly reaching an understanding about Aurizon’s intermodal business that had the purpose and/or would be likely to have the effect of substantially lessening competition in the supply of intermodal and steel rail linehaul services.
In addition, the ACCC alleges that Pacific National’s proposed acquisition of Aurizon’s Queensland intermodal business and the Acacia Ridge Terminal, as well as an agreement for Pacific National to operate the interstate side of the Acacia Ridge Terminal, would each separately have the likely effect of substantially lessening competition.
Following today’s hearing, the ACCC has been granted injunctions against Aurizon which require it to continue to operate its Queensland intermodal business.  The ACCC also sought orders for injunctions against Pacific National not to solicit employees and the top 10 customers of the business until the court proceedings are finalised, however those orders were not made.
“Given Aurizon’s previous announcements that it would close its Queensland intermodal business if the Pacific National acquisition was opposed by the ACCC, the ACCC sought an urgent interlocutory injunction to prevent Aurizon from closing its Queensland intermodal business until the ACCC’s proceedings involving that business are determined by the Court,” ACCC Chair Rod Sims said.
“It is part of the ACCC’s case that, at all times, Aurizon had alternatives to selling to Pacific National that would have been more competitive. The ACCC is aware of at least one alternative purchaser that is willing and able to acquire Aurizon’s entire remaining intermodal business.”
The final proceedings have been set down for a two week hearing starting on 19 November 2018.
“The ACCC will allege that it was more lucrative for Aurizon to agree to sell parts of the intermodal business to the closest competitor and close parts of that business than it was to sell the whole intermodal business to a new entrant,” Mr Sims said.
 

Aurizon Acacia Ridge intermodal rail terminal

Pacific National, Aurizon fall foul of the ACCC

The ACCC has instituted proceedings in the Federal Court against Pacific National and Aurizon, and their related entities, for allegedly reaching an understanding in relation to Aurizon’s intermodal business that had the purpose and/or would be likely to have the effect of substantially lessening competition in the supply of intermodal and steel rail linehaul services.
“The ACCC alleges that in July 2017 Pacific National and Aurizon reached an understanding that would lead to Aurizon exiting its intermodal business through a combination of closure and transactions with Pacific National. The effect of the understanding was that Aurizon would stop competing with Pacific National to supply intermodal and steel rail linehaul services throughout Australia,” ACCC chairman Rod Sims said.
The ACCC also alleges that Pacific National’s proposed acquisition of Aurizon’s Queensland intermodal business and the Acacia Ridge Terminal, as well as an agreement for Pacific National to operate the interstate side of the Acacia Ridge Terminal, would separately each have the likely effect of substantially lessening competition.
The ACCC is seeking declarations, pecuniary penalties, orders restraining Pacific National from acquiring the Acacia Ridge Terminal and Aurizon’s Queensland intermodal business, and costs. The ACCC has also applied for an injunction to prevent Aurizon from closing its Queensland intermodal business while the case is being determined.
Aurizon intermodal sale process
During the first half of 2017, Aurizon engaged in a sales process for its intermodal business. That business consisted of several interconnected components, including the Acacia Ridge Terminal, and its interstate intermodal and Queensland intermodal businesses (which both depend on access to the Acacia Ridge Terminal).
The ACCC alleges that, in late July 2017, Pacific National and Aurizon reached an understanding and Aurizon terminated its sales process with other bidders.
The ACCC alleges that the understanding involved Pacific National obtaining control of Acacia Ridge Terminal, either by PN acquiring the terminal or, if that was prevented by the ACCC, by a long term contract appointing it as operator of the interstate side of the terminal, commencing 1 December 2018.
The ACCC also alleges that the understanding involved Pacific National becoming the exclusive bidder for Aurizon’s Queensland intermodal business, but that if Pacific National did not acquire that business, Aurizon would close it.
The ACCC alleges that Pacific National and Aurizon gave effect to this understanding by executing formal contracts including contracts for the sale of the Acacia Ridge Terminal and the operation of the Acacia Ridge Terminal (the Terminal Services Subcontract), and to negotiate exclusively for the sale/purchase of the Queensland intermodal business. Subsequently, Pacific National and Aurizon entered into an agreement for Pacific National to acquire the Queensland intermodal business.
In addition, Aurizon announced the closure of its interstate intermodal business on 14 August 2017. The business was closed by December 2017.
Earlier this year, Aurizon announced that it would close its Queensland intermodal business if the ACCC opposed the proposed acquisition by Pacific National.
The ACCC alleges that the closure of Aurizon’s interstate intermodal business and the planned closure of the Queensland intermodal business is a direct and expected consequence of the understanding reached with Pacific National.
The ACCC’s competition concerns
“Pacific National and Aurizon are the only providers of intermodal rail linehaul on the North Coast Line servicing northern Queensland. The ACCC alleges that the understanding, the proposed acquisitions by Pacific National and the agreement appointing Pacific National as operator of the Acacia Ridge Terminal would have the effect of creating a monopoly on that route,” Mr Sims said.
“Further, Pacific National and Aurizon were, at the time of the understanding, two of only three competitors on interstate routes. We consider that Aurizon’s closure of its interstate intermodal business substantially lessened competition on those interstate routes.
“At all times, Aurizon had alternatives to selling to Pacific National that would have been more competitive. The ACCC is aware of at least one alternative purchaser that is willing and able to acquire Aurizon’s entire remaining intermodal business,” Mr Sims said.
“However, the evidence makes it clear that it was more lucrative for Aurizon to agree to sell parts of its intermodal business to its closest competitor, and close other parts of that business, than it was to sell the whole intermodal business to a potential new entrant.”
“Given Aurizon’s announcement that it will close its Queensland intermodal business if the Pacific National acquisition is opposed by the ACCC, in circumstances where there is at least one alternative purchaser, the ACCC is seeking an interlocutory injunction to prevent Aurizon from closing this business until the matter is determined by the Court,” Mr Sims said.
Proposed undertaking
During the ACCC’s review, Pacific National sought to address the ACCC’s concerns relating to its proposed acquisition of the Acacia Ridge Terminal by offering a court enforceable undertaking that it would not discriminate in providing access to the Acacia Ridge Terminal.
“The ACCC is of the view that the long term behavioural undertaking offered by Pacific National is not capable of addressing the ACCC’s concerns about the loss of competition resulting from the alleged understanding or Pacific National’s proposed acquisitions of Aurizon’s Queensland intermodal business and the Acacia Ridge Terminal,” Mr Sims said.
Further information is available at Pacific National Pty Ltd / Linfox – proposed acquisitions of Intermodal assets from Aurizon.

Australia’s national truck laws must be substantially redrafted, the Australian Trucking Association said in response to the first issues paper of the Heavy Vehicle National Law (HVNL) review.

Don't sell WestConnex: ATA

The ACCC should not approve the sale of WestConnex to Sydney Transport Partners (STP), because in the long run it would push up truck tolls even further, the chairman of the Australian Trucking Association Geoff Crouch said.
“Transurban is the majority interest holder in STP. It already holds, or has majority control of, 15 of the 19 toll road concessions in Australia,” Mr Crouch said.
In a submission to the ACCC, the ATA said the proposed acquisition would reduce competition for the construction, ownership and operation of toll roads in NSW. The ATA said it would give Transurban an increased ability to secure new toll road concessions based on increasing the heavy vehicle multiplier on its existing toll road assets.
In Sydney, the NSW Government’s tolling principles require truck tolls to be at least three times higher than car tolls, and Transurban has demonstrated a willingness to use interstate truck toll multipliers as part of its case for increasing local multipliers.
“The 16,000 hardworking trucking businesses in New South Wales cannot afford the truck tolls they are charged now. The proposed sale would inevitably result in tolls becoming even higher,” Mr Crouch said.
“Motorists have the ability to hop on the train or catch the bus if they wish to avoid toll roads, but a freight transporter can’t strap their load to the back of a bicycle and hope for the best,” he said.
Mr Crouch dismissed the argument that high truck tolls simply reflected the increased road maintenance cost caused by heavy vehicle use.
“For a fully laden, six-axle articulated truck, the estimated marginal cost of road wear on an urban toll road is 16 cents per kilometre. On the M7, for example, the truck toll of $1.19 per kilometre is more than seven times the actual cost,” he said.
Read the ATA submission here.
 

ACCC may throw a roadblock in the way of PN, Aurizon

The ACCC has raised preliminary competition concerns about Pacific National’s proposed acquisitions of Aurizon’s Queensland intermodal freight haulage business and intermodal rail terminal at Acacia Ridge in Brisbane.
Currently, Pacific National and Aurizon are the only providers of intermodal rail linehaul services in Queensland and compete closely with each other.
“Aurizon’s decision to sell its Queensland intermodal operations and the Acacia Ridge Terminal to its closest competitor, while shutting down its remaining intermodal business, will fundamentally change this market. We are concerned about the impact on competition in the freight industry,” ACCC chairman Rod Sims said.
The ACCC has published a Statement of Issues outlining concerns about the reduction of intermodal rail linehaul providers from two to one in Queensland, raised barriers to entry for rail companies if Pacific National controls the Acacia Ridge terminal, and the reduction in options for freight-forwarders on most interstate rail routes from two to one.
Although freight services company SCT Logistics will remain on interstate rail routes, it is vertically integrated with freight forwarding and does not generally haul many containers for other freight forwarders.
The ACCC has received extensive feedback from interested parties who say there is no close alternative to rail for many types of freight, particularly to and from far north Queensland.
“We are concerned the proposed acquisitions would lead to increased prices and reduced service for freight hauled between Brisbane and Far North Queensland,” Mr Sims said.
The ACCC is also concerned about Pacific National’s proposal to acquire the Acacia Ridge Terminal.
“The Acacia Ridge Terminal is an important infrastructure asset, and would be a key component in the strategy of any potential supplier of intermodal rail freight that wants to compete with Pacific National.”
Pacific National has offered a section 87B undertaking that it would not discriminate in providing access to the Acacia Ridge Terminal if the acquisition went ahead.
The ACCC is consulting on the proposed undertaking as part of the Statement of Issues consultation.
“The ACCC’s preliminary view is that a section 87B undertaking won’t resolve the concerns arising from the dominant provider of intermodal rail linehaul services nationally also owning the Acacia Ridge Terminal,” Mr Sims said.
“We welcome feedback from all interested parties on the issues we have outlined.”
The ACCC is inviting further submissions from interested parties in response to the Statement of Issues by 3 April 2018. The ACCC’s final decision is expected to be announced on 24 May 2018.
The Statement of Issues and the s 87B undertaking are available on the public register here: Pacific National / Linfox – proposed acquisitions of Intermodal assets from Aurizon.
Background
Pacific National is the largest provider of intermodal rail freight services in Australia. Currently, Pacific National and Aurizon are the only providers of intermodal rail freight services within Queensland. Aurizon previously also competed with Pacific National and SCT on interstate routes.
The interstate rail network is a standard gauge rail track, while the rail network north of Brisbane is narrow gauge and requires specific locomotives and wagons.
The Acacia Ridge Terminal has both a standard gauge terminal (supporting interstate transport), which was used by both Pacific National and Aurizon, and a narrow gauge terminal (supporting transport within Queensland) used only by Aurizon. Pacific National’s Queensland rail operations currently use a separate terminal at Tennyson, which is owned and operated by Pacific National.

ACCC permits Qube acquisition of MCS

The Australian Competition Consumer Commission (ACCC) has announced that it will not take any further action in relation to Qube Holdings’ acquisition of Maritime Container Services.
The ACCC’s investigation focused on the supply chain for containerised freight through Port Botany, particularly the role of empty container parks in the chain. MCS controls Cooks River, a container park with rail sidings used by some of Qube’s rivals, often for regional containerised rail freight.
“It is important for regional exporters and rail operators to have access to empty container parks with rail facilities,” said Rod Sims, Chairman, ACCC. “While there are a limited number of these types of empty container parks in Sydney, there appear to be sufficient choices for Qube’s rivals in rail, stevedoring and logistics.”
The ACCC considered whether the vertical integration of an empty container park with Qube’s existing rail assets, intermodal terminals and 50 per cent interest in Patrick stevedores could result in preferential treatment for Qube or discrimination against Qube’s competitors. A key consideration was whether the acquisition could reduce competition in the market for rail container transport services between regional New South Wales and Port Botany.
The ACCC identified alternative empty container parks operated by DP World Logistics, and soon by Linx, that could act to constrain Qube’s incentive to discriminate against rivals.
“The alternative empty container parks with rail access will provide exporters in regional New South Wales and rail operators the option of moving to other facilities if they consider they are receiving less favourable treatment from Qube,” said Sims. “Some large regional exporters have already moved to alternative container parks. The threat of continued switching by customers limits the impact of discriminatory behaviour by Qube, and may also act to constrain Qube from engaging in such behaviour in the first place.”
The ACCC considered that it would be unlikely that Qube could leverage the operation of MCS to preference Patrick, because of the availability of alternative empty container parks and the role of shipping lines in choosing stevedores.
Qube and MCS completed the acquisition in late December 2017, just days after Qube notified the ACCC of its intention to do so. At the request of the ACCC, prior to completion, Qube gave the ACCC a court-enforceable undertaking to hold the MCS business separate from Qube until at least 14 March 2018.
By choosing not to seek informal ACCC clearance before completing the transaction, Qube and MCS were exposed to potential legal action seeking divestiture and penalty orders had the ACCC formed the view that the acquisition was likely to have the effect of substantially lessening competition, in breach of section 50 of the Competition and Consumer Act 2010.

ACCC questions Qube acquisition

The Qube acquisition of Melbourne Container Services (MCS) has hit a snag with the Australian Competition and Consumer Commission formally questioning the deal, The Australian has reported.
MCS operates shipping container import and export handling, empty container storage and road and rail transport services in Sydney.
The acquisition occurred in late December 2017 and has been completed. However, Qube has provided the ACCC with an undertaking that it will keep the MCS business separate and independent from the remainder of Qube’s existing operations until at least 14 March 2018.
According to The Australian, Qube also tried to acquire MCS in 2010 in a deal that the ACCC blocked.
Logistics & Materials Handling has reached out to Qube for comment.

ACCC says no to BP's acquisition of Woolworths service stations

The ACCC intends to oppose the proposed acquisition by BP Australia Pty Ltd of Woolworths Limited’s (ASX:WOW) network of retail service station sites.
Woolworths currently operates 531 sites and has 12 sites in development. BP supplies fuel to approximately 1,400 BP-branded service stations throughout Australia, setting fuel prices at roughly 350 of them.
“We consider that BP acquiring Woolworths’ service stations will be likely to substantially lessen competition in the retail supply of fuel,” ACCC chairman Rod Sims said.
“Woolworths is a vigorous and effective competitor that has an important influence on fuel prices and price cycles in many markets throughout the country. Many consumers seeking out cheaper petrol will head to Woolworths petrol stations.
“BP prices are significantly higher on average than Woolworths prices in the major capital cities (see charts below). BP generally increases prices faster than Woolworths during price increase phases, and is slower to discount during the price discounting phase of cycles,” Mr Sims said.
“We believe that fuel prices will likely increase at the Woolworths sites if BP acquires them and other retailers would then face less competitive pressure. The bottom line is that we consider motorists will end up paying more, regardless of where they buy fuel, if this acquisition goes ahead.
“Fuel is a major expense for many households, and even a small increase in prices due to reduced competition will have a major impact on drivers,” Mr Sims said.
“This acquisition will likely affect metropolitan price cycles by making the price jumps quicker, larger and more coordinated. Reduced competition will also mean that prices will not fall as far, or as quickly, in the discounting phase of the cycle,” Mr Sims said.
In forming its view, the ACCC conducted extensive data analysis of all major retailers’ fuel prices to determine the effect that BP and Woolworths have in both local and metropolitan-wide areas.
The ACCC considered whether the competition concerns in metropolitan and local areas could be addressed by divesting sites.
“This has been the most significant merger investigation and decision the ACCC has considered in 2017. The ACCC has determined that the underlying concerns arising from the proposed acquisition would not be addressed by the divestments proposed by BP,” Mr Sims said.
The ACCC took into account a large number of submissions from a broad range of market participants including motoring groups, competitors, and both corporate and individual consumers.
Price charts
The chart below, which was published in October when the ACCC released its study into the Brisbane petrol market, highlights the difference between each major retailers’ average regular unleaded petrol (RULP) price and the market average RULP price in Brisbane in the period 1 January to 30 April 2017.

Major retailers’ average regular unleaded petrol (RULP) price and the market average RULP price in Brisbane in the period 1 January to 30 April 2017. Source: ACCC calculations based on data from Informed Sources. Originally published in ACCC: Report on the Brisbane petrol market. Note: Informed Sources collects price data electronically from its subscribers and manually for other brands. Note: COCO means BP company-owned and operated sites, and excludes BP dealers sites; “cpl” is cents per litre.

The chart below shows the average price at BP company controlled sites and Woolworths sites, compared to the city-wide average, in each of Sydney, Melbourne, Brisbane and Perth, for the period of 1 January 2015 to 28 March 2017. The results for Brisbane are different to the above chart due to the different data-sets analysed.
Average price at BP company controlled sites and Woolworths sites, compared to the city-wide average.
Source: ACCC calculations based on data from Informed Sources.

More information is available on the ACCC’s public register: BP – proposed acquisition of Woolworths’ retail service station sites
Related but separate decision on authorisation applications regarding Shopper Docket and Rewards Loyalty Program
In a separate decision, and applying a different legal test, the ACCC was also required to consider authorisation applications from Woolworths and BP relating to aspects of their proposed commercial alliance.
The ACCC has decided to grant those applications for authorisation subject to conditions.
These conditions specify that BP and Woolworths must limit shopper docket and loyalty scheme discounts to no more than 4 cents per litre (in total per fuel purchase). Woolworths would not be permitted to fund more than 2 cents of the 4 cent discount.
While discounts to consumers are generally beneficial, the ACCC has long-standing concerns that fuel discounts offered through shopper docket or similar schemes can have anti-competitive effects if they are at a level that efficient fuel retailers are unable to match. The ACCC has also expressed its concern about the potential for supermarket funding of fuel discounts to distort competition in fuel retailing.
The conditions have been imposed to address these concerns.
However, the authorised conduct would only occur in the event BP acquires Woolworths’ network of service stations. As noted above, the ACCC today announced that it intends to oppose that proposed acquisition.
Further information, including a copy of the decision, is available from the ACCC’s public register: BP & Ors – Authorisations – A91580, A91581 & A91582.
Background information
The ACCC commenced a public review of the proposed acquisition on 15 March 2017 under the informal merger review process. On 28 April 2017, the ACCC commenced the related, but separate, Authorisation process for the loyalty program and shopper docket discount scheme.
The ACCC’s assessment of the proposed rollout of Woolworths’ Shopper Docket Discount Scheme and Loyalty Program was conducted separately to the assessment of the proposed acquisition. These two assessments have been undertaken separately because Woolworths and BP applied for authorisation of some aspects of the proposed transaction under a specific authorisation process set out in the Competition and Consumer Act 2010, and also sought clearance for BP to acquire Woolworths’ petrol stations under the ACCC’s informal merger clearance process, which is a separate process. As required by the Competition and Consumer Act 2010, the ACCC did not take into account any detriments or any benefits resulting from the proposed acquisition (if it were to proceed) as part of its assessment of the authorisation applications.
On 10 August 2017, the ACCC released a Statement of Issues in relation to the proposed acquisition outlining preliminary competition concerns. On 29 August 2017, the ACCC released a Draft Determination in relation to the Authorisation process (BP & Ors – Authorisations – A91580, A91581 & A91582).
BP supplies fuel to approximately 1,400 BP-branded service stations throughout Australia. Of these sites, BP controls approximately 350 sites, via ownership or commission agency arrangements. Additionally, BP sets the price of diesel only at approximately a further 30 ‘diesel commission agency’ sites. At the remaining BP-branded sites prices are set independently by third-party site operators.
Woolworths Limited currently operates 531 sites and has 12 sites in development. Woolworths entered fuel retailing in the late 1990s, establishing service stations that offer fuel discounts to those purchasing groceries at its stores. In August 2003, Woolworths entered into an alliance with Caltex to operate dual-branded service stations. These dual-branded sites are operated by Woolworths and obtain all fuels from Caltex.

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