ACCC response to Caltex/BP refining joint venture proposal

The Australian Competition and Consumer Commission has noted the announcement that Caltex (owner of the Caltex and Ampol brands) proposes to enter into a joint venture refining arrangement with BP.

'This proposal raises very substantial competition issues for the oil industry, particularly because Shell and Mobil have a proposal before the ACCC for a similar merger of their refining business,' ACCC Chairman, Professor Allan Fels, said today.

'The combined effect of these proposals is a reduction in the number of petroleum refinery operations in Australia to two players.

'The ACCC is concerned about the potential effect on competition of this announcement on the degree of concentration in refining and will examine the proposal very carefully as well as fully considering its implications for the Shell/Mobil venture.

'Currently, an important source of petroleum products for independents is from Australian refineries. It should be noted that the level of 'independent' imports of petrol into Australia, particularly on the eastern seaboard, is quite low. Also, the concept of independent import refers to imports other than by the four major oil companies.

'The ACCC will now proceed to have further discussions with Shell and Mobil about their proposals as well as separate discussions with Caltex and BP.

'The ACCC is also considering the implications of the proposed worldwide acquisition of Mobil by Exxon. Exxon (known in Australia as Esso) no longer plays a role in the wholesale and retail petrol markets in Australia. However, Esso and BHP are producers of crude oil from the Bass Strait, a major source of supply of oil to Australian refineries and have interests in gas exploration and production.

'As always, the interests of the public will play a major role in the ACCC's considerations'.