Woolies "disappointed" with ACCC decision

Marco Green
December 14, 2017

The competition watchdog said BP's acquisition would likely lead to higher fuel prices, highlighting that BP's prices on average were sharply higher than Woolworths in Australia's big cities.

The Australian Competition and Consumer Commission says the deal would substantially lessen competition as fuel prices would probably increase at Woolworths sites if BP were to buy them.

Camera IconBP meant to add Woolworths 531 existing sites and 12 under development, to its own chain of 1,400 branded outlets.

According to the ACCC, fuel prices would increase at the hundreds of Woolworths sites if BP took over, which would also lessen competitive pressure on other retailers in the market.

Mr Sims said the acquisition would have a "major impact" on motorists and likely affect metropolitan price cycles by making the price jumps quicker, larger and more co-ordinated.

One of the reasons that BP has higher prices is that it supplies fuel to more than 1,000 independently operated service stations and does not want its own outlets to be seen to be consistently undercutting its wholesale customers.

Nearly a year ago, the supermarket chain Woolworths closed a $1.785 billion deal to sell its fuel business to BP.

The ACCC has rejected BP's proposal to buy out Woolworth's national portfolio of petrol stations - a deal worth almost $1.8 billion, with funds speculated to be directed back into its retail family, including embattled discount retailer, Big W, who is in the last stages of a major restructure.

BP said was was disappointed by the announcement fromthe ACCC.

"We have worked closely over many months with BP and the ACCC through an extremely rigorous and demanding process", the supermarket giant said.

"The bottom line is that we consider motorists will end up paying more, regardless of where they buy fuel, if this acquisition goes ahead", ACCC chairman Rod Sims said in a statement on Thursday.

Woolworths has voiced its disappointment with the ACCC's decision, stating that it would be assessing its options in the forthcoming period.

The blocked acquisition boosted BP rival Caltex Australia Ltd, which stood to lose a major fuel supply contract with Woolworths that it said previously would have cost it up to A$150 million in lost earnings before interest and tax, or 15 percent of its forecast earnings for 2017.

Other reports by Click Lancashire

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