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ACCC skeptical on Caltex’s new petrol acquisition

Caltex4The Australian Competition and Consumer Commission (ACCC) announced its concerns regarding the proposed acquisition of Caltex.

The petrol giant plans to acquire 46 gas stations of Milemaker Petroleum in Victoria. ACCC saw it as possibly decreasing the competition for the retail supply of petrol in Melbourne.

“Milemaker is a significant independent chain in Victoria, with a distinct strategy to price lower than the major operators. The ACCC’s past studies of retail petrol markets have shown that competitive outcomes are better when there are more of these vigorous competitors in the market,” ACCC chairman Rod Sims said.

“Milemaker generally has average prices, which are lower than Caltex, is quick to discount and often slow to respond to the large price increases that characterise the retail petrol price cycle”.

Most Milemaker gas stations are branded as Caltex and are difficult to distinguish from Caltex’s company-operated sites. However, they set retail prices independently of Caltex (aside from diesel at certain sites).

“The ACCC’s initial observations suggest that the proposed acquisition may remove a vigorous and effective competitor in retail fuel in Melbourne,” Sims said. “Our concern, therefore, is that the acquisition may lead to Melbourne motorists paying more for petrol.”

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