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CC provisionally clears fuel distribution merger

26 Jul 2012 12:43 PM

The Competition Commission (CC) has provisionally cleared DCC Energy UK Limited’s completed acquisition of heating and transport fuel distribution businesses previously owned by Total Downstream UK plc.

DCC, which operates GB Oils, bought these businesses in September 2011 from Rontec LLP Limited, which had previously bought them from Total in June 2011. The acquisition included the Butler Fuels oil distribution business, which sells and distributes heating and transport fuels to domestic and business customers, and the contractual right to supply transport fuels to a number of dealer-owned, dealer-operated retail service stations currently under the Total brand. Distribution businesses generally deliver to customers that require smaller delivery volumes than customers of oil majors and traders (that mainly deliver in large, articulated tankers).

The CC has provisionally found that the range of customers supplied by these businesses would not suffer from a substantial lessening of competition as a result of the acquisition:

  • Customers with large load requirements, such as service stations, would continue to have a range of supply options.
  • Local customers with smaller requirements would face a reduction in choice in some areas but the ease of small-scale entry for other companies would counteract any dangers.
  • Customers requiring smaller loads across a number of sites (multi-site non-bulk) can and already do source from a number of suppliers and are prepared to switch in response to price rises.

Simon Polito, Chairman of the DCC/Rontec Inquiry Group and CC Deputy Chairman said:

‘Central to our decision has been the effect on customers requiring small-scale deliveries across a number of sites and whether they would be likely to use a number of different suppliers as an alternative to a single supplier with nationwide coverage. We found that these customers are generally quite sophisticated in their purchasing practices, a number of them already multi-source and are also prepared to switch in response to a price increase, so we decided the impact of the merger on these customers would be small.’

The Office of Fair Trading (OFT) referred the case in April, and the CC is expected to publish its final report by 18 September 2012.

The full provisional findings report is available on the DCC/Rontec inquiry home page along with all other information relating to the investigation.

Any interested party is invited to respond to the provisional findings report, in writing, by no later than 16 August 2012. To submit evidence, please email: dcc-rontec@cc.gsi.gov.uk or write to:

Inquiry Manager
DCC/Rontec inquiry
Competition Commission
Victoria House
Southampton Row
LONDON
WC1B 4AD

Notes for editors

1. The OFT said in its GB Oils/Pace decision that: GB Oils operates under a number of different brands, principally: Bayford Oil, Brogan Fuels, Carlton Fuels, CPL, Emo Oil, F Peart & Co, Gulf, Scottish Fuels, Southern Counties, Team Flitwick, Town & County Fuels (as well as other regional and local brands) and now Pace Fuelcare.

2. The members of the DCC/Rontec Inquiry Group are: Simon Polito (Chairman of the Inquiry Group and CC Deputy Chairman), Ivar Grey, John Cubbin and Peter Jones.

3. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.

4. The Enterprise Act 2002 empowers the OFT to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.

5. The CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

6. Further information on this inquiry, including the terms of reference and other key documents, as well as on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from the CC website at: www.competition-commission.org.uk.

7. Enquiries should be directed to Rory Taylor or Siobhan Allen or by ringing 020 7271 0242.