BP plan to buy Australian petrol pump network blocked

BP plan to buy Australian petrol pump network blocked

BP (LON:BP) has suffered a setback Down Under, with the Australian competition watchdog opposing the energy group's acquisition of Woolworths' network of retail service station sites.

The deal, however, is expected to be opposed by the Australia's antitrust regulator as it considers the proposal to substantially reduce competition in the retail supply of fuel.

Dealers have direct responsibility to provide remedies to consumers, according to the ACCC, but they also have a right under the Australian Consumer Law to recover the reasonable costs of providing these from the vehicle manufacturers when the manufacturer is at fault.

"BP prices are significantly higher on average than Woolworths' prices in the major capital cities".

Rod Sims, chairman at ACCC says, "The ACCC recommends several reforms to improve the new auto retailing industry, which should lead to better outcomes for consumers".

Mr Holmes said the company was confident that, with the appropriate divestments that the transaction would not lessen competition substantially.

BP prices were three cents above the Sydney average across the period
BP prices were three cents above the Sydney average across the period

"The ACCC decision maintains a level playing field and preserves local-area competition". Many consumers seeking out cheaper petrol will head to Woolworths petrol stations.

"It's not just the average price of fuel you'll pay more, we believe if the merger proceeds you'll also have an even sharper and more irritating petrol price cycle", he told ABC Radio on Friday.

Sims added: "This acquisition will likely affect metropolitan price cycles by making the price jumps quicker, larger and more coordinated". BP generally increases prices faster than Woolworths during price increase phases, and is slower to discount during the price discounting phase of cycles.

"We believe that fuel prices will likely increase at the Woolworths sites if BP acquires them and other retailers would then face less competitive pressure". In Sydney Woolies was just under the market average, but BP was 3 cents a litre above.

"We are concerned that some manufacturers impose unnecessarily complex warranty claim processes, leaving dealers inadequately compensated for repairs or remedies provided to consumers".

The British firm announced a year ago it had agreed to pay US$1.3 billion to buy, rebrand and operate Woolworths' existing 531 fuel and convenience stores, plus 12 sites under construction.

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