OFT Mulls Undertakings in Petrol Forecourt Merger

Jack Humphrey, Regulatory journalist
October 28, 2011 /

The Office of Fair Trading (OFT) is considering undertakings offered by Rontec Investments LLP related to its proposed acquisition of certain petrol forecourts, stores and other assets from Total Downstream UK plc, Total UK Limited and their affiliates.

Rontec currently operates 24 petrol stations for BP and Esso and owns 44 petrol stations which it runs under the Snax24 brand with co-branding agreements with BP, Esso, and Shell.

Rontec will initially acquire the entirety of Total’s retail fuel network in the UK, Isle of Man and Channel Islands made up of 810 Total branded sites, Total’s non-retail fuel distribution activities including its wholly-owned trading division, Total Butler, as well as certain other assets.

On completion of the proposed transaction, 251 and the contractual rights for three of the independently owned and operated Total-branded sites will be sold on to Shell UK Limited. At the same time, the contractual rights for 318 of the independently owned and operated Total-branded sites, Total Butler, and certain other assets will be sold on to DCC plc.

This transaction is the first in a series of related transactions which will ultimately lead to the exit of Total from downstream retail supply and distribution.

Under the proposed transaction, Rontec would acquire and operate 238 Total-branded sites across the UK.

The OFT concluded that the proposed transaction would not give rise to competition concerns nationally. Of the 44 local areas in which Rontec’s existing service stations overlapped with Total outlets, the OFT concluded that the deal raised competition concerns in just one local area, Haverfordwest in Pembrokeshire.

Under the Enterprise Act 2002, the OFT has a duty to make a reference to the Competition Commission in the event that arrangements are in progress which, if carried into effect, will result in the creation of a relevant merger situation, and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

In order to address these concerns, Rontec has offered to divest the Total Crossways site in Haverfordwest.

Amelia Fletcher, OFT Chief Economist and Decision Maker in this case, said: Against a background of public worry over petrol prices, we were concerned about any adverse impact that the merger may have on competition. After a detailed investigation, we concluded that the merger was largely pro-competitive on a national basis leading to the expansion of a smaller firm in the retail supply of petrol. We were concerned to ensure that local consumers were protected and found that the merger raised competition concerns in Haverfordwest, Wales and we are now considering remedies offered by the parties to resolve these.’

The OFT is required to consult publicly on draft provisional undertakings in lieu prior to taking any decision to accept such undertakings.

 

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