Caltex buy out of Mobil servos in doubt

Caltex's $300 million takeover of 302 Mobil service stations under threat; ACCC says move likely to inflate prices

By Michael House | September 4, 2009

The proposed $300 million takeover of 302 Mobil service stations by Caltex could be under threat after the competition watchdog expressed concerns the takeover could push fuel prices higher.

The Australian Competition and Consumer Commission (ACCC) says the move is likely to significantly increase Caltex’s ability and incentive to increase the wholesale price of petrol and diesel to non-integrated retailers.

Wholesale prices are also likely to rise, the ACCC's preliminary report finds, due to the fact the buyout will reduce the size of the "contestable" wholesale market.

"This reduces the incentives for other wholesalers to compete against Caltex for new wholesale customers," the report says.

"The proposed acquisition is likely to weaken the competitive reaction of other wholesalers to a wholesale price increase by Caltex."

The concerns have been backed by motoring groups such as the NRMA and the RACV, which say competition at the bowsers would be weakened should a takeover take place.

"The ACCC has raised some serious concerns, that Caltex‘s acquisition will reduce competition in the wholesale and retail market," NRMA President Wendy Machin says.

"The NRMA alluded to the fact that competition would be seriously compromised in our submission to the ACCC on the proposed acquisition."

Caltex is remaining tight-lipped over the issue, with a spokeswoman telling ATN the company will put forward its views to the ACCC in private.

"Caltex acknowledges the concerns raised by the ACCC in its statement of issues and will address these in a confidential submission," the spokeswoman says.

"Caltex has and will continue to work with the ACCC while its review is ongoing."

A final decision on the proposed deal is expected to be announced by the ACCC on October 7, after receiving submissions from market participants before a September 16 deadline.

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