Regulator warns of higher petrol pump prices from sale of Woolworths
MOTORISTS could face higher petrol prices if Woolworths wins approval to sell its Caltex service stations to rival petrol company BP Australia, the competition regulator has warned.
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MOTORISTS could face higher petrol prices if Woolworths wins approval to sell its Caltex service stations to rival petrol company BP Australia, the competition regulator has warned.
GROWING NUMBER OF MOTORISTS USING APPS TO TURN TABLES ON PETROL PRICE GOUGE
The Australian Competition and Consumer Commission says the proposed $1.8 billion deal could “substantially lessen competition” for petrol and groceries from convenience stores.
Flagging its concerns on Thursday, ACCC chairman Rod Sims said the deal “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”.
“Woolworths appears to influence retail market fuel prices by either leading price reductions or quickly following other retailers that reduce prices,” Mr Sims said.
“The proposed acquisition removes Woolworths’ influence on metropolitan markets and we are concerned that BP would not follow Woolworths’ pricing strategy.
“Competition may become softer, costing consumers.”
Woolworths owns 528 service stations that sell petrol supplied by Caltex. BP owns or supplies about 1400 service stations selling its petrol.
Under the deal, all the Woolworths stations will be rebranded BP.
Another concern raised by the ACCC was the potential impact on prices for groceries at convenience stores.
BP said the ACCC’s concerns were “routine” and its views were preliminary.
“We are confident we can work with the ACCC to address the issues they have raised and we look forward to obtaining clearance at the end of this process,” BP Australia president Andy Holmes said.
“We believe that Australian retail fuel and convenience markets are highly competitive and will remain so following the completion of the transaction.”
In a statement, Woolworths said it would “continue to work with BP and the ACCC to progress the merger clearance process”.
The two companies have said they will form a partnership as part of the deal, with Woolworths’ 4c-a-litre shopper dockets to be redeemable at BP outlets.
Customers at BP outlets will also be able to accumulate Woolworths loyalty points.
According to BP, there are about 6800 retail service stations in Australia.
If the deal with Woolworths goes ahead, it will mean BP owns or supplies 1928 retail sites — about 28 per cent of outlets.
In its statement of issues, the ACCC said it would seek further feedback from the industry and consumers before making a decision in October.
Specifically, the regulator wants submissions about the potential for an increased likelihood of co-ordinated price setting within metropolitan fuel markets, the impact of removing Woolworths from the market and the impact on the supply and prices of convenience groceries.
It says Woolworths has been a “vigorous and effective” competitor in the retail fuel market.
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