Watchdog wary of Woolies- BP $ 1.8b servos merger

CONSUMERS could face higher petrol prices if Woolworths is given approval to sell its Caltex service stations to rival petrol company BP Australia for $ 1.8 billion.

The Australian Competition and Consumer Commission said the proposed deal could “substantially lessen competition”.

“The transaction 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,” ACCC chairman Rod Sims said yesterday.

“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 which sell Caltex petrol. BP owns or supplies 1400 service stations which sell BP petrol. All the Woolworths stations will be rebranded BP.

Another concern raised by the ACCC was the potential impact on prices for convenience grocery consumers.

However, BP said the ACCC’s concerns were “routine” and were just the regulator’s preliminary views.

“We are confident we can work with the ACCC to address the issues they have raised,” BP Australia president Andy Holmes said.

“We believe that Australian retail fuel and convenience markets are highly competitive and will remain so following the completion of the transaction,” Mr Holmes said.

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

According to BP and Woolworths, after the transaction the two companies will form a “partnership” and include a 4c a litre shopper- docket petrol discount for Woolworths customers and intends to expand the discount to other BP outlets. Customers at BP outlets will also be offered the option to accumulate Woolworths loyalty points.