The consumer watchdog’s decision to block BP’s Woolworths takeover bid has been welcomed as a win-win outcome for both consumers and industry.
The Australian Competition and Consumer Commission (ACCC) announced on Monday it would oppose BP’s proposed acquisition of Woolworths service stations, flagging concerns it could lead to increased petrol prices at the bowser.
ACCC chairman Rod Sims said the acquisition would have been “likely to substantially lessen competition” in the retail supply of petrol.
“Many consumers seeking out cheaper petrol will head to Woolworths petrol stations,” Mr Sims said in a statement.
“Woolworths is a vigorous and effective competitor which has an important influence on fuel prices and price cycles in many markets throughout the country.”
He added that, generally, BP petrol is priced “significantly higher” than that at Woolworths.
“BP generally increases prices faster than Woolworths during price increase phases, and is slower to discount during the price discounting phase of cycles,” Mr Sims said.
“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.
“The bottom line is that we consider motorists will end up paying more, regardless of where they buy fuel, if this acquisition goes ahead.”
National Roads and Motorists’ Association (NRMA) spokesman Peter Khoury said this was a positive result for consumers who ultimately want competition and lower prices.
“About 17 per cent of a family’s weekly budget goes towards transport costs,” he told The New Daily.
“We support the ACCC’s decision. They took their time in coming to their decision which was appropriate.
“This is an opportunity to reduce the cost of motoring.”
Mr Khoury said motorists were becoming increasingly aware of the petrol price cycle and the resources available, such as apps, to track down the cheapest nearby petrol in real time.
“With Christmas fast approaching, there are always price hikes in petrol around this time of year,” he said.
“We think that the typical family sedan can save $18 to $19 on a full tank of petrol by buying petrol at its cheapest.”
Small Business and Family Enterprise Ombudsman Kate Carnell said the ACCC’s rejection of BP’s proposal was good news for existing BP-branded franchisees.
She said it would help maintain a level playing field and preserve competition.
“If the application had been approved it would have had a detrimental effect on the commercial value of existing BP-branded operations,” Ms Carnell said.
“These small business owners entered into multi-year commercial arrangements and paid fees to BP to operate under a BP brand.”
BP released a statement on Thursday indicating it was consulting with its lawyers to determine the company’s next steps.
“We are disappointed by the news today from the ACCC,” BP Australia President Andy Holmes said.
“We remain confident that, with appropriate divestments as offered by BP, this transaction would not substantially lessen competition.
A BP spokeswoman told The New Daily the company believes the retail fuel markets would have remained “highly competitive” should the acquisition have gone ahead.
“Roughly 5 per cent of all retail fuel sites in Australia are currently owned and operated by BP,” she said.
“After the proposed acquisition this figure would increase to about 13 per cent.”
BP supplies fuel to 1400 BP-branded petrol stations across Australia, of which it controls prices at about 350.
Woolworths currently operates 531 sites, with 12 sites in development.