The Australian Competition and Consumer Commission will not oppose the acquisition of Burmah Castrol by BP Amoco, ACCC Chairman, Professor Allan Fels, said today.
In March this year, BP Amoco announced a public offer to acquire all shares in Burmah Castrol.
BP Amoco is one of the world's largest oil companies and is registered in the United Kingdom. It is involved in oil and natural gas exploration and production, petroleum refining and marketing, and petrochemical manufacturing and production on a global basis. BP Amoco subsidiaries in Australia operate refineries and a network of retail service stations under the BP brand name.
Burmah Castrol is a UK-registered company specialising in the manufacture of lubricants, chemicals and associated services internationally. It is best known in Australia for its Castrol brand of lubricant products and for its network of Burmah Fuels retail service stations.
"The main areas of competitive overlap between BP Amoco and Burmah Castrol are in the manufacture and supply of lubricant products and fuel retailing.
"The ACCC has carefully considered the competitive impact of this merger. Based on information supplied by the parties and obtained during the course of market inquiries, the ACCC concluded the proposed acquisition was unlikely to lead to any substantial lessening of competition, after taking into account an undertaking offered by BP Amoco to the ACCC.
"There are numerous other lubricant manufacturers providing an important source of ongoing competition to BP Amoco and the other domestic oil refiners. Toll manufacturing of lubricant products in which third parties provide base oil and additives in addition to packaging as well as the production of generic lubricants blended to a third party's specification are quite common in Australia.
"The level of competition in the retail market for automotive lubricants is quite intense. That intensity is unlikely to be diminished as a consequence of this merger as BP Amoco has not been aggressive marketer of its own brand lubricant products in Australia.
"In the area of industrial lubricants, non-transparent pricing through competitive tendering provides buyers with significant countervailing power against lubricant suppliers.
"Neither BP Amoco nor Castrol are significant suppliers of lubricant products to the aviation industry in Australia. In the area of marine lubricants for domestic shipping, BP Amoco has failed to establish any significant market presence.
"Most of the business of Burmah Fuels has been transferred over to other parties. The wholesale fuels business has been sold off to international oil trader Trafigura. Control of around half of the retail fuels network has been transferred over to 7-Eleven, with a number of other retail outlets having already been sold off.
"The ACCC's concern in regard to BP Amoco's continuing interest in Burmah Fuels retail service station sites has been addressed through an undertaking provided by BP Amoco relating to divestiture.
"In these circumstances, the ACCC believes that the proposed acquisition is unlikely to lead to a substantial lessening in competition".