Elgas Ltd - s.87B undertaking

Company or individual details

  • Elgas Ltd
    002 749 260
  • Wesfarmers Kleenheat Gas Pty Ltd
    008 679 543
  • Wesfarmers Chemicals Energy and Fertilisers Ltd
    008 797 402

Undertaking

On 18 December 2014, the ACCC announced it had accepted an undertaking (Elgas Undertaking) given by Elgas Ltd in relation to its proposed acquisition of Wesfarmers Kleenheat Gas Pty Ltd’s (Kleenheat’s) Australian east-coast liquefied petroleum gas (LPG) assets (the Proposed Acquisition).

The Elgas Undertaking requires Elgas Ltd to divest parts of Kleenheat’s business in New South Wales and the Australian Capital Territory to Renegade Gas Pty Ltd (Renegade), and in Victoria to Origin Energy LPG Ltd (Origin). The ACCC has also accepted an undertaking given by Kleenheat (Kleenheat Undertaking), which requires Kleenheat to carry out a number of supporting actions to enable the divestitures to occur.

The ACCC considered that in the absence of the Elgas Undertaking and the Kleenheat Undertaking, the Proposed Acquisition would have had the effect or have been likely to have the effect of substantially lessening competition in relation to certain markets for the distribution of cylinder and bulk non-automotive LPG in Australia.

The objective of the Elgas Undertaking is to address the ACCC's competition concerns which would otherwise arise as a consequence of the Proposed Acquisition by:

(i) ensuring that certain Kleenheat LPG distribution assets based in regional Victoria are divested to Origin (or to another approved purchaser if the divestiture does not occur within a certain period)

(ii) ensuring that certain Kleenheat LPG distribution assets based in the Australian Capital Territory and regional New South Wales are divested to Renegade (or to another approved purchaser if the divestiture does not occur within a certain period)

(iii) creating or strengthening Origin’s (or an alternative approved purchaser’s) position as a viable, effective, stand-alone, independent and long term competitor in the distribution of cylinder and bulk non-automotive LPG by enhancing its presence in regional Victoria (including some areas across the border into New South Wales)

(iv) creating or strengthening Renegade’s (or an alternative approved purchaser’s) position as a viable, effective, stand-alone, independent and long term competitor in the distribution of cylinder and bulk non-automotive LPG by enhancing its presence in regional New South Wales (including some areas across the border into Victoria) and the Australian Capital Territory

(v) ensuring that Origin and Renegade (or any other approved purchasers of the divestiture assets) have all the necessary related assets, personnel, transitional and other assistance and other rights to compete effectively with Elgas in the distribution of cylinder and bulk non-automotive LPG

(vi) maintaining the economic viability, marketability, competitiveness and goodwill of the divestiture assets, and

(vii) providing for the effective oversight of Elgas’ compliance with the Elgas Undertaking.