ACCC concerns on proposed BP, Woolworths deal
The consumer watchdog said this decision may lead to a decline in competition amongst petrol suppliers if it pushes through.
“[It] would reduce the number of major rivals in fuel retailing. The transaction could see retailers face less competitive pressure to keep their prices low and as a result, motorists may end up paying more at the pump,” ACCC chairman Rod Sims said.
The ACCC has received submissions from a wide range of interested parties including industry associations, fuel retailers, wholesale fuel suppliers, corporate and individual consumers.
“Woolworths appears to influence retail market fuel prices by either leading price reductions, or quickly following other retailers that reduce prices, especially in the downwards phase of metropolitan price cycles,” Sims said.
“The proposed acquisition removes Woolworths’ influence on metropolitan markets and we are concerned that BP would not follow [Woolies’] pricing strategy. Competition may become softer, costing consumers. We are investigating this issue from a metropolitan-wide perspective in the major Australian cities.
“The ACCC is also analysing the effect of the proposed acquisition on local markets in the vicinity of individual Woolworths’ service stations across Australia. It will publish preliminary views on local market issues in coming weeks. BP has stated publicly that it intends to divest sites in certain local areas.”
According to the consumer watchdog, it’s a complex transaction because on top of the metropolitan-wide issues, there are hundreds of local areas they should still consider. Sims also said the proposed acquisition may have an impact on convenience stores.
“This is another part of the transaction that requires examination to see what the likely impact would be on competition, and prices,” Sims said.
Following the proposed acquisition, BP and Woolworths proposed to enter into a commercial alliance including a new retail convenience offering, Metro@BP.
Woolworths’ shopper docket discounts and loyalty programme would also be available at certain BP sites. According to AAP, Woolworths has sold its 527 fuel convenience stores plus 16 development sites to BP. The petrol company already owns 350 retail sites in the country and also supplies other 1,050 BP-owned sites.
The ACCC’s final decision is scheduled for 26 October 2017.