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ACCC voices Milemaker concerns

The proposed acquisition of Victorian fuel retailer Milemaker could reduce competition in the Melbourne fuel market, according to the ACCC.

The Australian Competition and Consumer Commission issued a Statement of Issues today, expressing “initial concerns” about Caltex Australia’s proposed acquisition of 46 Milemaker service stations.

ACCC chairman Rod Sims said the Milemaker was a “significant independent chain in Victoria, with a distinct strategy to price lower than the major operators”.

“The ACCC’s past studies of retail petrol markets have shown that competitive outcomes are better when there are more of these vigorous competitors in the market,” he said.

“Milemaker generally has average prices which are lower than Caltex, is quick to discount and often slow to respond to the large price increases that characterise the retail petrol price cycle.”

An independent Caltex franchisee, Milemaker operates under the Caltex brand but sets its own retail prices for petrol.

“The ACCC’s initial observations suggest that the proposed acquisition may remove a vigorous and effective competitor in retail fuel in Melbourne,” Mr Sims said.

“Our concern, therefore, is that the acquisition may lead to Melbourne motorists paying more for petrol.”

In a statement to the ASX, Caltex Australia sought to remind that the ACCC’s concerns were not a conclusive indicator of an eventual outcome.

“Caltex notes that a statement of issues is a preliminary, but not concluded, view by the ACCC of its investigations into the proposed transaction,” the statement read.

“Caltex is working with the ACCC with a view to addressing the preliminary issues it has raised today.

“As outlined in Caltex’s recently-announced results, we are confident of addressing these issues.”

Submissions to the Statement of Issues are due by 30 March 2017, with the ACCC’s final decision set to be announced on 20 April 2017.

 

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