The independent fuel operators who have battled major service stations for years could be about to get a new lease on life thanks to the competition regulators.

More than 100 servos are expected to hit the market in the next few months as the ACCC runs the ruler over two proposed deals in the sector.

BP’s purchase of the Woolworths service stations has dominated the headlines, but Caltex’s catch-up play to buy Milemaker is expected to result in some corporate activity soon.

The natural buyers have been identified as the independents like United, Freedom and the Singapore-linked Puma.

The Australian Competition & Consumer Commission delivered a statement of issues last week that flagged divestments were likely to be needed for the deal to pass.

Milemaker sells Caltex-branded fuels at 46 sites across Victoria, but sets the price itself, and Rod Sims has declared he believes Caltex will have too much concentration in the market once the transaction is finalised. Caltex sets the price for 7 per cent of the Victorian market and the purchase will raise that level to 11 per cent.

The ACCC statement was expected but naturally has prompted analysts to question how Caltex and chief executive Julian Segal will navigate the potential hurdles.

Citi analysts said the one way to appease the ACCC would be for Caltex and Milemaker to offer a guarantee on its pricing strategy.

But lawyers quickly discounted the idea, given it would essentially abolish the free market forces in price-setting.

Credit Suisse has estimated that BP could have to offload up to 90 of the 527 service stations as part of its $1.8 billion purchase.

The question now is, if the ACCC is taking such a keen interest in Caltex and Milemaker, a relatively small deal, how much attention will be paid to the much larger BP and Woolworths transaction.

Analysts think the deal could be approved with more conditions than expected or a higher number of servos having to be divested.

 Extracted from The Australian.