Caltex awaits umpire on Mobil takeover

THE fate of Caltex’s $300 million acquisition of 302 Mobil service stations in Australia’s eastern states rests with the Australian Consumer and Competition Commission (ACCC), which will need to be convinced that the new-look network will work quite separately from the big Woolworths fuel retail network that also sells Caltex fuel.

Caltex has pledged that its own enlarged network of service stations will operate in competition with the Woolworths/Safeway service station chain, which offers shopper-docket discounts that are popular with customers but the bane of independent service station operators.

Caltex, which is 50 per cent owned by America’s Chevron Group but listed on the Australian stock exchange, says the purchase of the Mobil network from ExxonMobil will boost its retail market reach from 16 per cent to 22 per cent – the same as both Coles Express (selling Shell-branded fuel) and Woolworths. BP has 19 per cent, with independents holding just seven per cent.

Petrol pricing crusader and independent senator for South Australia, Nick Xenophon, has called on the ACCC and Foreign Investment Review Board (FIRB) to reject the Caltex move, which he said would put Australian motorists under the pump.

“Australia’s petrol market is already too heavily dominated by a handful of players,” he said. “This will only make things worse, and force all of us to pay more.”

The petrol industry giants have already earned the wrath of Senator Xenophon and fellow senator Barnaby Joyce who have joined forces to co-sponsor a private member’s bill in federal parliament next month, designed to end “the practice of predatory pricing” in the fuel market.

According to the senators, the bill will protect independent fuel retailers from big oil companies, which they say, seem to be getting bigger.

“The independent fuel retailers are already at the mercy of the big oil companies and Coles and Woolworths,” Senator Xenophon said.

“There is no possible case for making a big oil company any bigger.

“If the ACCC has any commitment to a fair market, it must disallow this proposed take-over.” But Caltex says that under the new arrangements, it will only have control over fuel prices at service stations supplying 11 per cent of the market.

It says Caltex and Woolworths compete in the retail market, with Woolworths setting its own prices.

According to Dow Jones, Caltex does more than supply fuel to Woolworth’s networt. It says 133 of Woolworths’ 540 sites are either owned by Caltex or leased to Woolworths by Caltex.

Caltex says the acquisition applies only to Mobil retail outlets, and not Mobil’s oil supply and refinery business.

It also indicated that Mobil would continue to supply newly acquired service stations in Victorian and South Australia, even though they would be re-branded as Caltex outlets. Caltex already supplies Mobil service stations in NSW and Queensland.

Caltex reported a 58 per cent fall in operating profit and 95 per cent decline in net profit in the year ended December 31, but Caltex says it will fund the acquisition of the 200 freehold and 102 leasehold sites through internal cashflow.

It also says it will keep on the 1700 employees of the Mobil network.

Mobil will still retain a retail foothold in Australia, representing about five per cent of fuel sales.