Australia's antitrust regulator will block BP PLC's (BP) planned acquisition of a network of gas stations across Australia, which it said likely would significantly reduce competition in retail fuel supply.
The Australian Competition and Consumer Commission, which had flagged its concerns several months earlier, said it had determined that a proposal from BP to sell some of the sites it aimed to acquire from retailer Woolworths Ltd. (WOW.AU) wouldn't address its concerns.
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At the end of last year, Woolworths entered a binding agreement to sell a portfolio of about 530 gas stations plus more than a dozen development sites to BP for 1.79 billion Australian dollars (US$1.36 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.
"This has been the most significant merger investigation and decision the ACCC has considered in 2017," Rod Sims, chairman of the regulator, said.
The ACCC said Woolworths was an effective competitor with an important influence on fuel prices in many markets in the country, and the sale of its sites to BP would likely lead to higher prices and reduced competition. BP already supplies fuel to about 1,400 BP-branded service stations in Australia, setting fuel prices at roughly 350 of them.
"The bottom line is that we consider motorists will end up paying more, regardless of where they buy fuel, if this acquisition goes ahead," Mr. Sims said.
The retailer said it was disappointed by the decision and both it and BP would now assess options.
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(END) Dow Jones Newswires
December 13, 2017 17:53 ET (22:53 GMT)