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how a major oil company could raise
the wholesale price to sites with which
it competes in a local market, this either
raising the overall price to the consumer
or limiting the independent retailer's
ability to compete with discounting.
In its Statement ACCC also described
the industry practice of the bundling of
services by oil majors to retail operators.
The ACCC said it understood that
the bundle included the provision of
wholesale supply, brand and fuel card.
Their concern was the likely effect this
would have on a retailer if the proposed
acquisition proceeded, citing that there
would be limited options available.
Mobil would be excluded, as it would
no longer have elements to offer -- brand
and fuel card - while Shell's contract with
Coles limited its ability to supply brand to
certain locations. This would leave BP as
the only potential alternative to Caltex for
A considerable number of consumers,
motoring groups and retail competitors
made further submissions on these
points prior to the ACCC making its final
The long awaited announcement, made
by the ACCC on 2 December 2009, was
that it intended to oppose the proposed
Its decision was based on the "likely
effect of the proposed acquisition on
local market competition for the supply of
petrol, as well as broader concerns about
the effect of the acquisition on the stability
and effectiveness of coordination between
the major fuel retailers in determining
The ACCC identified 53 Mobil sites
that would likely result in a substantial
lessening of competition in the retail
markets for the supply of fuel -- petrol,
diesel and LPG.
"The acquisition of these sites by Caltex
would be likely to lead to reduced retail
competition resulting in higher fuel prices
for consumers," ACCC Chairman Graeme
The ACCC also concluded that it
was "likely the proposed acquisition
would increase the effectiveness of
current market practices that act to limit
competition in petrol retailing." The ACCC
defined 'current market practices,' as the
coordinated jump in the fuel prices during
the weekly price cycle in several Australian
"The ACCC considers that this
coordination is facilitated through the
frequent exchange of pricing information
between competitors via the Informed
Sources Oil Pricewatch System," Mr.
The decision sparked an immediate
call from the Minister for Competition
Policy and Consumer Affairs, the Hon Dr
Craig Emerson, for an investigation into
possible anti-competitive petrol pricing
practices. The Government, wanting initial
advice before Christmas, asked whether
this coordinated activity is affecting the
pattern and height of the price cycle to the
determent of motorists.
The two oil majors involved took
distinctly different approaches. Caltex
provided a press statement that left
the door open for further action on this
"Caltex will consider its position on
the basis of its announcement, the public
competition assessment and further
discussion it proposes having with the
ACCC. Caltex will then determine what
action it will take in response to the
announcement," said Caltex Managing
Director & CEO Julian Segal.
However, Mobil was more subdued,
stating it was "disappointed, although not
surprised" at the ACCC's announcement.
"Mobil remains of the firm view that
this sale will not result in a lessening
of competition in the fuel market," a
Caltex has not ruled out further attempts
at acquisitions stating that it "will focus
on growing [its] existing business and
pursuing adjacent step out and merger
and acquisition opportunities."
The ACCC noted that it was satisfied,
based on information supplied by Mobil,
that if the sale to Caltex did not proceed,
Mobil will exit its retail business in
Australia within the next two to three years.
It also said that it considers that a
significant proportion of the sites would
be purchased by retailers with a greater
propensity to discount compared to the
oil majors, including Caltex."
Source: Caltex media release dated
Source: ACCC Petrol Inquiry, 2007.
Wholesalers refer to parties which own
a wholesale facility as defined under the
Trade Practices (Industry Codes -- Oilcode)
NSW after QLD before QLD after
Source: ACCC Petrol Inquiry, 2007. Wholesalers refer to parties which own a wholesale facility as defined under the Trade Practices (Industry Codes
Oilcode) Regulations 2006.
Changes in wholesale supply of ulp before and after proposed acquisition
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