Caltex Australia’s $95 million deal to buy Victoria’s Milemaker Petroleum has run into trouble with the competition regulator, which has voiced concern it may cut competition of petrol supply in Melbourne.

The takeover of the independent chain “may remove a vigorous and effective competitor in retail fuel in Melbourne,” Rod Sims, chair of the Australian Competition and Consumer Commission said in a statement on Thursday.

Caltex said it is “working with the ACCC with a view to addressing the preliminary issues” raised by the regulator and it is “confident” of meeting the concerns.

The hiccup for the acquisition comes as the ACCC has started examining a much larger deal, BP’s proposed $1.8 billion takeover of Woolworths’ fuel retail network, a deal that is expected to involve significant competition issues.

The Milemaker deal is one of the smaller acquisitions targeted by Caltex as it looks elsewhere for growth after being beaten by BP to the Woolworths network on price.

Mr Sims said most consumers may be unaware of Milemaker because its sites are branded Caltex but noted they set retail prices independently of the large fuel supplier.

“Our concern, therefore, is that the acquisition may lead to Melbourne motorists paying more for petrol,” he said.

The ACCC has invited parties to respond to a statement of issues, released on Thursday, with the final decision on the deal to be announced on April 20.

Extracted from Australian Financial Review.