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 .
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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.
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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.
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(END) Dow Jones Newswires
August 09, 2017 20:35 ET (00:35 GMT)