Competition boss Rod Sims says the coming review of BP’s
$1.8 billion Woolworths petrol station takeover will be lengthy, as local competition issues at the 527 service stations will need to be assessed.
In his first comments on the deal, the Australian Competition and Consumer Competition chairman said that the one-year timetable for completion the two companies had put on the deal was unusual but understandable.
“They seem to be taking a very considered approach — the deal was negotiated late last year and we are yet to get a submission,” Mr Sims told The Australian yesterday, stressing he had no complaint about that.
On December 28, following a six-month sales process, it was announced that BP would pay $1.78bn for Woolworths’ 527 Australian petrol stations and the pair would form a convenience store partnership with expanded loyalty programs and a plan to roll out up to 200 modern stores.
Yesterday, BP chief executive Bob Dudley told British investors he did not expect the deal to be finished until early 2018 — a slightly longer completion target than flagged in BP’s press release at the time.
Mr Sims said the ACCC would made a comprehensive assessment.
“We have to consider the impact of chain-on-chain competition, so how many players you have in each of the markets and what that might mean for pricing,” he said.
“Secondly, you look at it bottom up, which is that with a range of sites around the country, it could be that there are local issues.”
Mr Sims said he assumed the bottom-up review was what had spurred the one-year timetable adopted by BP and Woolworths. “This will be one where it could take a while.”
The ACCC is doing preliminary work on the deal and has welcomed submissions from interested parties.
In London on Tuesday, Mr Dudley called the acquisition “somewhat unusual” but “very attractive for us”.
“In the UK we have got a great (petrol station/convenience store) model with Marks & Spencer in our retail growth and revenue growth, and we have got a chance to replicate that very successful strategy in Australia.”
BP is the last remaining oil major in Australia’s fuel marketing and distribution business. But it sees Australia as a place it can make money by pursuing a strategy, successful in Britain and Germany, of teaming up with retailers to push more convenience store sales as petrol demand slows and electric vehicles, driverless cars and car-sharing potentially transform transport in coming years.
The deal with Woolworths will make BP the nation’s biggest petrol station owner and that, along with the expanded loyalty programs, is why the companies have given the ACCC a year to work through any issues.
Extracted from The Australian.