Competition Law

Australian Competition Law and Policy Discussion

Caltex proposes acquisition of Mobil service station sites

Posted by Julie Clarke on 28 May 2009

Caltex has announced that it has entered into an agreement to acquire 302 Mobil service station sites. The media is buzzing and politicians are having a field day, with usual suspects Barnaby Joyce (‘It’s going to reduce competition. This is ridiculous. We keep on centralising back our market place, we keep losing an opportunity for the Australian family to go into the business‘) and Nick Xenephon (”It will put motorists literally under the pump” and ”It’s anyone’s guess how high prices could go up, but several cents a litre wouldn’t be out of the question” (has he made these figures up?)) hitting the airways.

Caltex claims the acquisition will increase retail petrol price competition with Woolworths and Coles.  Most consumers and consumer advocates believe the opposite is true. Former ACCC Chairman, Allan Fels, has weighed into the debate suggesting that this acquisition may be ‘one too many’ in the retail petrol market (of course Fels has an almost notorious history with Caltex as a result of the infamous Caltex raid to investigate possible price-fixing claims several years ago).

Of course the ACCC, not the politicians or popular media commentators, will determine whether or not the merger will substantially lessen competition with the law or, if challenged, ultimately the courts. The parties have not yet made a clearance submission to the ACCC but have indicated they will do so and the ACCC will commence informal review once they are received.  It will almost certainly involve an extended inquiry and it will be interesting to watch the drama unfold …

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