ACCC rejects BP buyout of Woolworths petrol stations

COMPETITION tsar Rod Sims says petrol prices would have risen by 1c to 2c a litre had he given BP the green light to buy Woolworths’ network of service stations.

COMPETITION tsar Rod Sims says petrol prices would have risen by 1c to 2c a litre had he given BP the green light to buy Woolworths’ network of service stations.

The Australian Competition and Consumer Commission on Wednesday said it would oppose BP’s deal to buy Woolworth’s 531 petrol stations in a deal worth $1.75 billion.

“We felt that a 1c to 2c price increase for Australian motorists really does matter,” ACCC chairman Mr Sims told Business Daily.

ACCC chairman Rod Sims says the deal would likely lead to higher fuel prices.

Mr Sims said BP already supplied fuel to about 1400 BP-branded service stations throughout Australia and set the fuel prices at about 350 of them.

Its prices were significantly higher on average than Woolworths prices in the major capital cities, he said.

BP was also quicker to lift its fuel prices and slower to discount them within the regular fuel pricing cycle, he 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,” Mr Sims said.

Consumers will pay more for fuel if the deal goes ahead as BP lifts petrol prices faster and cuts them more slowly than its rivals, the ACCC says..

“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.”

Shares in rival Caltex Australia jumped almost 4 per cent in the wake of the announcement and Woolworths shares fell more than 1 per cent during intraday trading.

Woolworths said in a statement to investors that it was “disappointed with the ACCC’s decision”.

“We have worked closely over many months with BP and the ACCC through an extremely rigorous and demanding process,” the retailer said.

BP and Woolworths struck their deal almost a year ago, but it has now been scuttled.

The competition watchdog had already expressed concerns about the deal, which was first proposed in late 2016.

BP had offered to sell a number of sites in order to appease competition concerns.

BP Australia president Andy Holmes said the energy major was disappointed by the decision and would seek legal advice.

“We remain confident that, with appropriate divestments as offered by BP, this transaction would not substantially lessen competition,” Mr Holmes said.

BP says it will seek legal advice over the ACCC’s decision.

“In light of this, we are currently consulting with our lawyers to determine our next steps.

Mr Homes said the proposed deal would bring a compelling new offer to Australian consumers that would transform convenience retailing in Australia.

“It would be the first of its kind for Australia’s growing convenience sector, bringing together BP’s quality fuels, Woolworths Rewards and a new range of high quality, fresh take-home food,” he said.