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Regulator Gives Green Light For DCC Acquistion
26th July 2012
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 Competition Commission 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.