ACCC fears case of highway robbery

MOTORISTS could face higher petrol prices if Woolworths wins approval to sell its Caltex service stations to rival BP Australia, the competition regulator has warned.

The Australian Competition and Consumer Commission says the proposed $1.8 billion deal could “substantially lessen competition” for petrol and groceries from convenience stores.

Flagging its concerns yesterday, ACCC chairman Rod Sims said the deal “could see retailers face less competitive pressure to keep their prices low and, as a result, motorists may end up paying more at the pump”.

“Woolworths appears to influence retail-market fuel prices by either leading price reductions or quickly following other retailers that reduce prices,” Mr Sims said.

“The proposed acquisition removes Woolworths’ influence on metropolitan markets and we are concerned that BP would not follow Woolworths’ pricing strategy.

“Competition may become softer, costing consumers.”

Woolworths owns 528 service stations that sell petrol supplied by Caltex. BP owns or supplies about 1400 service stations selling its petrol.

Under the deal, all the Woolworths stations would be rebranded BP.

BP said the ACCC’s concerns were “routine” and its views were preliminary.

“We are confident we can work with the ACCC to address the issues they have raised and we look forward to obtaining clearance at the end of this process,” BP Australia president Andy Holmes said.

“We believe that Australian retail-fuel and convenience markets are highly competitive and will remain so following the transaction.”

Woolworths said it would “continue to work with BP and the ACCC to progress the merger clearance process”.

The two companies have said they would form a partnership, with Woolworths’ 4ca-litre shopper dockets to be redeemable at BP outlets.

Customers at BP outlets will also be able to accumulate Woolworths loyalty points.