CC Clears Fuel Distribution Merger

Jack Humphrey, Regulatory journalist
July 26, 2012 /

The Competition Commission (CC) has provisionally cleared DCC Energy UK Limited’s completed acquisition of heating and transport fuel distribution businesses previously owned by Total Downstream UK plc.

DCC, which operates GB Oils, bought these businesses in September 2011 from Rontec LLP Limited, which had previously bought them from Total in June 2011.

The acquisition included the Butler Fuels oil distribution business, which sells and distributes heating and transport fuels to domestic and business customers, and the contractual right to supply transport fuels to a number of dealer-owned, dealer-operated retail service stations currently under the Total brand.

The Office of Fair Trading said in its GB Oils/Pace decision that: GB Oils operates under a number of different brands, principally: Bayford Oil, Brogan Fuels, Carlton Fuels, CPL, Emo Oil, F Peart & Co, Gulf, Scottish Fuels, Southern Counties, Team Flitwick, Town & County Fuels (as well as other regional and local brands) and now Pace Fuelcare

Distribution businesses generally deliver to customers that require smaller delivery volumes than customers of oil majors and traders (that mainly deliver in large, articulated tankers).

The CC has found that the range of customers supplied by these businesses would not suffer from a substantial lessening of competition as a result of the acquisition. Customers with large load requirements, such as service stations, would continue to have a range of supply options. Local customers with smaller requirements would face a reduction in choice in some areas but the ease of small-scale entry for other companies would counteract any dangers.

Customers requiring smaller loads across a number of sites (multi-site non-bulk) can and already do source from a number of suppliers and are prepared to switch in response to price rises.

Simon Polito, Chairman of the DCC/Rontec Inquiry Group and CC Deputy Chairman said: “Central to our decision has been the effect on customers requiring small-scale deliveries across a number of sites and whether they would be likely to use a number of different suppliers as an alternative to a single supplier with nationwide coverage. We found that these customers are generally quite sophisticated in their purchasing practices, a number of them already multi-source and are also prepared to switch in response to a price increase, so we decided the impact of the merger on these customers would be small.”

 

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