OFT Considers Remedies in Petrol Forecourt Merger
The OFT is considering undertakings offered by Shell UK Limited (Shell) in relation to its completed acquisition of 253 petrol stations from Rontec Investments LLP (Rontec).
Rontec acquired the entirety of Total’s retail fuel network in the UK, Isle of Man and Channel Islands in October 2011, made up of 810 Total-branded sites. The OFT reviewed this transaction and accepted undertakings in lieu. In a related transaction which completed at the same time, Rontec sold 253 of these Total-branded sites to Shell.
Pre-acquisition, Shell had 876 branded forecourts in the UK. As a result of this transaction Shell acquired an additional 253 Total-branded sites across the UK.
The OFT concluded that the completed transaction would not give rise to competition concerns nationally. However, it did find that the deal raised competition concerns with respect to the retail sale of petrol and diesel in six local areas, and in the retail sale of auto-LPG in a further six local areas.
In order to address these concerns, Shell has offered to divest six petrol stations in the affected areas and the auto-LPG assets at the relevant petrol stations.
Given that there may be a restricted number of purchasers for the auto-LPG assets, the divestment undertaking will be the subject of an upfront buyer requirement in respect of auto-LPG and the OFT will assess the suitability of any proposed purchaser before deciding whether to accept the undertakings offered by Shell.
Amelia Fletcher, OFT Chief Economist, and Decision Maker in this case, said: “There is significant public concern over petrol prices, and we conducted a detailed investigation in order to identify any adverse impact that the deal may have on competition. Whilst we concluded that the merger raised no competition concerns at a national level, we found that it raised local competition issues regarding the retail sale of petrol and diesel and of auto-LPG.
“As a result, and in order to ensure that local consumers are protected, we are now considering remedies offered by the parties to resolve these concerns.”
The OFT is required to consult publicly on draft provisional undertakings provided in lieu of a reference to the Competition Commission (CC) prior to taking any decision to accept such undertakings.
While the undertakings in lieu are being considered, the OFT’s duty to refer the merger to the CC is suspended.