The Australian Competition and Consumer Commission (ACCC) is seeking views on the proposed acquisition of Woolworths Limited’s (Woolworths) network of retail service station sites by BP Australia Pty Ltd (BP).
Together with the proposed acquisition, BP proposes to enter into an ongoing retail convenience, shopper docket discount and customer loyalty partnership with Woolworths.
The ACCC’s investigation is focused on the impact on competition. In particular, we are seeking views on:
- Whether the proposed acquisition will lead to higher retail fuel prices
- How closely BP and Woolworths compete, both locally and across major metropolitan areas, and whether other fuel retailers will compete strongly with BP after the acquisition
- BP’s and Woolworths’ roles in the price cycles that operate in major metropolitan areas.
The legal test which the ACCC applies in considering the proposed acquisition is in section 50 of the Competition and Consumer Act 2010. Section 50 prohibits acquisitions that are likely to have the effect of substantially lessening competition in a market.
Responses may be emailed to BP-Woolworths-Petrol@accc.gov.au by 5pm on 14 April 2017
Background
BP (with its related entities) operates as a vertically integrated refiner-marketer of petrol, diesel and automotive liquefied petroleum gas (LPG). It is engaged in the exploration for and production of oil, natural gas and LPG and the refining, transportation and marketing of petroleum and lubricant products. BP supplies fuel to approximately 1,400 BP-branded service stations throughout Australia. Of these sites, BP owns and controls 316, and its agents control a further 31. At the remaining sites (approximately 1050), prices are set independently by third-party site operators.
Woolworths’ primary business is in food and liquor retailing. Woolworths’ retail fuel business currently operates in a co-branded alliance with Caltex Australia Petroleum Pty Ltd (Caltex) – both as a wholesale fuel customer of Caltex, and as an alliance partner with Caltex in the redemption of shopper docket fuel discounts. Woolworths’ retail fuel business currently operates 528 sites throughout Australia.
Following its acquisition of the Woolworths sites, BP would provide its own wholesale fuel supply to these sites. BP and Woolworths also propose to maintain Woolworths’ shopper docket scheme at former Woolworths’ service station sites (and extend it to certain other BP-branded sites). Further, following the proposed acquisition, BP and Woolworths will work in partnership to develop a new convenience grocery offer, ‘Metro@BP’, which is proposed to be piloted initially at a small number of BP sites before being rolled out at more than 200 BP sites.