Shell UK Signs Undertakings to Remedy Merger Concerns

July 12, 2012 /

Acquisition concerns have forced Shell UK Limited to sign undertakings to the Office of Fair Trading over the sale of six retail fuel sites and six auto-LPG (liquefied petroleum gas) sites to address the competition concerns arising from its completed acquisition of 253 petrol stations from Rontec Investments LLP (Rontec).

As a result, the merger will not be referred to the Competition Commission.

The OFT’s investigation found that there were no national competition concerns arising from the merger, but there was a realistic prospect that retail fuel prices would rise in the local areas of Guildford (Demon and Stoughton sites), Brenzett, Ewood, Ickenham and Great Barr, and that auto-LPG prices would go up at Stopsley, Fleet, Addlestone, Ducklington, Broughton and Grovebury. Following its investigation, the OFT announced on 3 February 2012 that it was suspending its duty to refer the merger to the Competition Commission because it was considering whether to accept undertakings in lieu of a reference.

In order to address the OFT’s competition concerns, Shell offered to divest retail fuel and auto-LPG sites in these local areas. Given that there were relatively few potential buyers for the auto-LPG sites, the OFT decided to insert an upfront buyer provision for those businesses. The buyer proposed for those businesses is Flogas UK Limited (Flogas).

Although the auto-LPG sites are located on Shell petrol forecourts, Flogas will be responsible for setting prices. Shell will have a duty to ensure that those prices are accurately and promptly displayed and that Flogas will have sufficient access to the sites.

The OFT carefully assessed and consulted publicly on the proposed undertakings, including on the suitability of Flogas as a purchaser of the auto-LPG divestment sites. It has not received any representations and has therefore concluded that the undertakings are appropriate to remedy the competition concerns identified in its decision of 3 February 2012.

Amelia Fletcher, Chief Economist at the OFT and Decision Maker in this case, said: “We were concerned about the possibility of fuel price rises in these 12 areas as a result of reduced competition. These divestments will ensure that motorists in these areas will continue to benefit from sufficient competition when buying their fuel.”

 

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