Caltex Australia’s proposed acquisition of 46 service stations in Victoria from Milemaker Petroleum may lead to Melbourne motorists paying more for petrol, Australia’s competition watchdog has warned.
In a preliminary view of the proposed acquisition released on Thursday, the Australian Competition and Consumer Commission said it is concerned that the acquisition could “substantially” reduce competition in Melbourne.
ACCC chairman Rod Sims said Milemaker is a significant independent chain in Victoria, with a distinct strategy to offer lower prices than the major operators.
He said the ACCC’s past studies of retail petrol markets had shown that competitive outcomes are better when there are more “vigorous” competitors in the market.
“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 in a statement.
“Our concern, therefore, is that the acquisition may lead to Melbourne motorists paying more for petrol.”
The ACCC said Milemaker generally has lower average prices than Caltex, is quick to discount and often responds slowly to large price increases.
Milemaker outlets operate under the Caltex brand and are hard to distinguish from Caltex’s company-operated sites, said the ACCC.
But the Milemaker sites set retail prices independently of Caltex.
Caltex noted that the ACCC’s views were preliminary and not concluded.
“Caltex is working with the ACCC with a view to addressing the preliminary issues it has raised today,” Caltex said in a statement.
“As outlined in Caltex’s recently announced results, we are confident of addressing these issues.”