MTAA Opposed to Caltex Takeover of Mobil

Media Release

MTAA OPPOSED TO CALTEX TAKEOVER OF MOBIL

The Motor Trades Association of Australia (MTAA) is opposed to the proposal, announced today, for Caltex to acquire some 302 retail fuel outlets from ExxonMobil’s Australian retail fuel network.

To suggest that such an undertaking would introduce more competition into the retail fuel market in Australia is nothing but sophistry.

MTAA has long warned governments and regulators of the dangers of allowing Australia’s petrol retailing industry to become concentrated in the hands of a few large players. All that will be achieved if this proposal should proceed will be an even larger number of retail fuel outlets subsequently being under the control of one refiner and supplier in the market and, with it, a greater concentration of market power into the hands of big oil.

The Association and its Members have been concerned about market concentration ever since Woolworths opened its first petrol outlet in Dubbo in 1996. Those concerns have been raised many times over the intervening years with governments and oppositions and with the ACCC; notably in relation to the alliances between Coles and Shell and Woolworths and Caltex. We said then that those arrangements would ultimately lead to further market concentration and this is now proven to be correct. MTAA is therefore very concerned now about the future of BP and the likelihood of a “comfortable oligopoly” becoming a very comfortable duopoly. The slide towards another duopoly market situation in Australia will have taken a giant step forward if the ACCC allows this deal to proceed.

That circumstance will have a significant effect on the ongoing viability of truly independent fuel retailers, as around 48 per cent of all retail fuel outlets would consequently be under the control of one supplier in the market. It would also be likely to have an impact on prices at the pump. Competition is best served by there being many competitors in the market place.

If this proposal is allowed to proceed, the retail petrol market in Australia will be dominated by the Caltex / Woolworths and Shell / Coles alliances to near the 75 per cent level.

The future of competition demands that this further concentration of market power be blocked and that diversity in the industry be maintained.

The proposed acquisition of the ExxonMobil sites fails to provide guidance as to the future of the very many dealers that currently operate the businesses on many of the 302 service stations. Most of these dealers have been in business and have promoted the Mobil brand for very many years, and they and their family’s fortunes are closely tied to the relationships established over that time. Where are the assurances that these dealers will be able to continue to operate their businesses? What are the details of the redundancy packages where an exit takes place?

And finally, where are the assurances that Caltex will not, subsequent to the acquisition, transfer some of these sites to the Woolworths/Caltex joint venture?

For these reasons, MTAA believes that the acquisition should be blocked, and it calls on the ACCC and the FIRB to reject the proposal of Caltex in the interests of the retail fuel industry, the independent small businesses in that industry and consumers. At the very least, the ACCC should ensure that, in the event that it allows the sale to go through, it should insist that all acquired sites be franchised under Oilcode, to ensure diversity of competition is maintained. Finally, the future of existing dealers must be protected.


ENDS

27 May 2009

For further information contact Ron Bowden 0408 601 516