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.

ACCC puts hold on BP buying Woolworths' service stations

At the request of BP and Woolworths, the ACCC has delayed its consideration of BP’s proposed acquisition of the Woolworths’ retail service station sites so that the ACCC can consider further information from the parties. The expected new decision date is 14 December 2017.
“This is a significant decision for the retail petrol market in Australia. The extension to the consideration period will allow the ACCC to consider further information from the parties,” ACCC chairman Rod Sims said.
“This potential transaction involves complex, extensive data analysis of fuel prices across all fuel sites in Australia over a number of years, and it’s vital we take the time to thoroughly assess its likely impact.”
Background
The ACCC commenced a public review of the proposed acquisition on 15 March 2017. The ACCC released a Statement of Issues outlining preliminary competition concerns on 10 August 2017.
BP supplies fuel to approximately 1,400 BP-branded service stations throughout Australia. Of these sites, BP controls 347 sites. This includes 316 of BP’s own network of sites referred to by BP as ‘company-owned-and-company-operated’ and 31 ‘commission agency’ sites. Additionally, BP sets the price of diesel only at a further 34 ‘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.
Authorisation applications
On 28 April 2017, BP lodged applications for authorisation on behalf of itself, Woolworths, and BP Resellers.
In addition to BP’s proposed acquisition of Woolworths’ network of retail service station sites, the applicants have applied for authorisation to implement a shopper docket discount scheme and loyalty program at participating BP sites as part of the ‘Commercial Alliance.’ The conduct includes third-line forcing and exclusivity arrangements between BP and Woolworths, and between BP and BP Resellers.
On 29 August 2017, the ACCC issued a draft determination proposing to grant conditional authorisation to BP. The conditions included that Woolworths and BP offer and comply with a section 87B undertaking acceptable to the ACCC which caps Woolworths’ shopper docket and Woolworths Rewards loyalty program fuel discount offers to 4 cents per litre in total. The ACCC will release its final determination on the applications for authorisation by 15 December 2017.
More information is available here: BP – proposed acquisition of Woolworths’ retail service station sites

CEVA Logistics opens Australasian HQ in Victoria

CEVA Logistics has officially opened its transport, distribution and logistics hub in Truganina. The facility is the largest in the southern hemisphere and will service clients including General Motors Holden, Continental Tyres, NBN Co, Michelin, Caltex, Accent Group and Mazda.
The $80 million, 166,000 square metre supersite – equivalent to eight MCG playing fields – will employ 250 workers in Melbourne’s west and create around 40 new positions.
CEVA will also operate Nissan Australia’s new state-of-the-art National Distribution Centre.
CEVA joins other major companies such as NewCold Logistics, Border Express, Toll, Linfox, DB Schenker, Silk Logistics and Australia Post who’ve chosen Melbourne as the location for their corporate headquarters.
In a press statement, Minister for Industry and Employment, Wade Noonan, welcomed the news. “Transport, distribution and logistics are some of Victoria’s most important industry sectors, contributing $21 billion annually to the state economy and employing around 260,000 people across Melbourne and regional Victoria,” he said. “The Andrews Labor Government will continue to support the logistics industry in Victoria – a huge contributor of jobs and economic opportunity state-wide.”
“With Australia’s largest container port and a 24-hour, curfew free airport – it’s little wonder Melbourne has become the logistics capital of Australia” said Minister for Industry and Employment, Wade Noonan. “Transport, distribution and logistics are big sectors for our state, contributing billions to the Victorian economy and creating tens of thousands of jobs.”
Member for Tarneit, Telmo Languiller added, “This is an exciting investment for the Truganina area, supporting local jobs and strengthening the state’s logistics industry.”
CEVA employs more than 42,000 people in more than 160 different countries, including around 1,800 in Australia.
The Sydney Morning Herald reported that Andrew Jenkinson, CEVA’s Vice President of contract logistics, announced that the group handles ‘reverse logistics’, transporting and dealing with defective items returned from stores or car dealerships and warranty issues or replacements of goods.
“We’re very involved in their supply chain. We have assessors in every state who go and inspect and say it’s a genuine warranty claim or not. It’s all processed online.”
Eight B-doubles will be able to unload at once at the new CEVA structures, on continuous loading docks with levellers.
The structures feature 4,000sqm of rooftop solar panels, rainwater storage, smart movement-sensing lights that switch on and off automatically and technology including advanced racking, traffic management and material handling systems. The facility is also trialling forklifts motion sensors that detect the specially tagged safety vests one people walking nearby. This equipment can shut the forklifts down in case of accidents, and can also track their movements and cargo weight to increase efficiency.
The 166,000sqm site is one of eight major sites on Australia’s east coast leased to CEVA by developer and builder Frasers Property Australia.

Caltex looks to the sun in outback diesel supply world-first

Supply 24-hour access to diesel in remote parts of Western Australia's Pilbara region has become much more feasible with the construction of what is believed to be the world's fully-transportable solar-powered retail fuel outlets. 

Caltex Australia's sites at Tom Price and Onslow, both more than 1300km from Perth, are not connected to mains power, instead relying on the abundant solar energy of the region and on-site battery storage technology.

The Australian company is pioneering the environmentally-friendly initiative to further extend the reach of its National Truck Network -the largest truck refuelling network in Australia, comprising 200 dedicated truck stops and 300 truck-friendly sites across the country.

Caltex Network Development Manager for Western Australia Leon Calvetti said diesel customers  d-driving between remote locations across the state were benefitting from the availability of the  fuel whenever they needed it.

“The biggest challenge of supplying fuel in remote parts of Australia isn’t getting fuel there – after all, we have fuel storage at the site and a great logistics team able to make regular deliveries,” Mr Calvetti said.

“The obstacle is powering the pumps so the fuel can get into the customer’s tank – it’s very expensive and inefficient to run a generator when there are only a handful of customers every day.

“It’s also difficult to locate staff in the middle of the Pilbara many hours’ drive from the nearest major town.

“By creating what we believe are the world’s first fully solar-powered fuel facilities, we can efficiently provide diesel in some of the most remote locations of Australia.

“The other benefit of these sites will come when, at some stage in the future, there is no longer the same demand in that area – if that happens we can simply relocate the entire facility to a new part of the country, as everything on the site is easily transportable by truck.

“The whole design is tailored to Australian conditions, given the abundant sun and the long distances between service stations.”

Mr Calvetti said that, unlike many fuel outlets in rural Australia, the innovative Caltex sites could offer diesel 24 hours a day via a card payment system.

“These sites offer the same high-quality diesel available elsewhere across our national network and customers can access it at any time,” Mr Calvetti said.

“But in such remote locations, with only a limited number of customers driving past, don’t expect all the typical services available at other Caltex sites.

“While these no-frills facilities won’t provide a pie, a can of soft drink or ice creams, they will help keep drivers of heavy transport and four-wheel-drive vehicles supplied with the diesel they need to get to the next town for a well-earned rest.”

New Caltex truck stop opens in Sydney's key freight hubs

Transport companies and truck drivers accessing Sydney's key air and sea transport hubs will have easier access to quality fuel with the opening of Caltex Australia’s purpose-built truck stop in Banksmeadow.

The Banksmeadow site is the newest addition to Caltex’s National Truck Network – the largest truck refuelling network in Australia, comprising 200 dedicated truck stops and 300 truck-friendly sites across the country.

Attached to Caltex’s Banksmeadow fuel terminal, the facility is designed to cater for a wide range of trucks, from light rigid trucks to B-doubles, with 16 ultra-high-flow pumps that can deliver diesel at a rate of 130 litres per minute.

The site provides 24/7 access to Vortex diesel, diesel and AdBlue and has StarCard facilities for easy payment and effective fleet management.

Caltex Australia's General Manager Business to Business Sales, Scott Nicholls, said the new site would be of significant assistance to trucks travelling along the eastern seaboard, joining key refuelling sites on major trucking routes from the Port of Melbourne, through to Sydney's ports, and onto the Port of Brisbane.

"The new site is ideally positioned between Sydney's two major international gateways -Port Botany and Sydney Airport -and connected to the key arterial roads that service approximately 7,750 commercial vehicles travelling into the area every day.

Caltex Australia's General Manager Business to Business Sales, Scott Nicholls, said the new site would be of significant assistance to trucks travelling along the eastern seaboard, joining key refuelling sites on major trucking routes from the Port of Melbourne, through to Sydney's ports, and onto the Port of Brisbane.

"The new site is ideally positioned between Sydney's two major international gateways -Port Botany and Sydney Airport -and connected to the key arterial roads that service approximately 7,750 commercial vehicles travelling into the area every day.

"Trucks delivering to, or loading from, the Port Botany and Mascot areas will greatly benefit from the new site."

"With nearby motorway expansions planned the Banksmeadow truck stop has a growing role to play providing convenient access to the high-quality fuels the transport industry needs to perform their critical function in our economy," Mr Nicholls said.

Last year Caltex bolstered its National Truck Network with the addition of 15 dedicated sites, including a facility at the Port of Brisbane.

Continuing its investment into Australia's growing transport and logistics sector, there are plans to open another 10 sites in 2016.

The Banksmeadow site will be added to Caltex's 'My Truck Mate' app and the online National Truck Network locator, providing drivers with real-world tools to help locate sites and plan the most efficient routes.

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