06/12    3 February 2012

The OFT is considering undertakings offered by Shell UK Limited (Shell) in relation to its completed acquisition of 253 petrol stations from Rontec Investments LLP (Rontec).

Pre-acquisition, Shell had 876 branded forecourts in the UK. As a result of this transaction Shell acquired an additional 253 Total-branded sites across the UK.

The OFT concluded that the completed transaction would not give rise to competition concerns nationally. However, it did find that the deal raised competition concerns with respect to the retail sale of petrol and diesel in six local areas, and in the retail sale of auto-LPG in a further six local areas.

In order to address these concerns, Shell has offered to divest six petrol stations in the affected areas and the auto-LPG assets at the relevant petrol stations.

Given that there may be a restricted number of purchasers for the auto-LPG assets, the divestment undertaking will be the subject of an upfront buyer requirement in respect of auto-LPG and the OFT will assess the suitability of any proposed purchaser before deciding whether to accept the undertakings offered by Shell.

Amelia Fletcher, OFT Chief Economist, and Decision Maker in this case, said:

'There is significant public concern over petrol prices, and we conducted a detailed investigation in order to identify any adverse impact that the deal may have on competition. Whilst we concluded that the merger raised no competition concerns at a national level, we found that it raised local competition issues regarding the retail sale of petrol and diesel and of auto-LPG. As a result, and in order to ensure that local consumers are protected, we are now considering remedies offered by the parties to resolve these concerns.'

The OFT is required to consult publicly on draft provisional undertakings provided in lieu of a reference to the Competition Commission (CC) prior to taking any decision to accept such undertakings.

While the undertakings in lieu are being considered, the OFT's duty to refer the merger to the CC is suspended.

NOTES

1. Rontec acquired the entirety of Total's retail fuel network in the UK, Isle of Man and Channel Islands in October 2011, made up of 810 Total-branded sites. The OFT reviewed this transaction and accepted undertakings in lieu. In a related transaction which completed at the same time, Rontec sold 253 of these Total-branded sites to Shell.
2. The Reference Test - The OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that a relevant merger situation has been created; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the UK for goods or services.
3. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the UK of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.
4. Under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate. In doing so, the OFT will have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it.
5. Before accepting any such undertakings, under Schedule 10 of the Enterprise Act 2002, the OFT shall give notice of the proposed undertakings and will consider any representations made in accordance with that notice.
6. The text of these decisions will be placed in the mergers section as soon as is reasonably practicable.