August 10, 2017 / 12:13 AM / 10 months ago

Australia antitrust regulator raises flags on BP Woolworths petrol buyout

(Reuters) - Australia’s antitrust regulator said on Thursday it was concerned BP Plc’s (BP.L) plan to buy the petrol stations of grocery giant Woolworths Ltd (WOW.AX) would hurt competition, a sign it may block the A$1.8 billion ($1.4 billion) deal.

FILE PHOTO - Customers leave a Woolworths supermarket in central Sydney February 25, 2011. REUTERS/Daniel Munoz/File Photo

The Australian Competition and Consumer Commission (ACCC) said the buyout would cut the number of major rivals selling petrol, reducing the incentive to keep retail prices low.

“As a result, motorists may end up paying more at the pump,” ACCC Chairman Rod Sims said in a statement.

Woolworths and London-based BP announced the deal in December 2016, a major component of the Australian retailer’s effort to cut non-core businesses and concentrate on a supermarket price war with rival Coles, owned by Wesfarmers (WES.AX).

A Woolworths logo is displayed above one of the company's supermarkets in Sydney, Australia, February 26, 2016. REUTERS/David Gray

Woolworths issued a statement noting the regulator’s concerns and said it would “continue to work with BP and the ACCC to progress the merger clearance process”.

The ACCC said Woolworths appears to influence fuel prices in large Australian cities, either by leading price cuts or quickly following competitors’ price cuts, and “we are concerned that BP would not follow Woolworths’s pricing strategy”.

    The regulator said it will publish a draft decision later this month, with a final decision scheduled for Oct. 26.

    Reporting by Ambar Warrick in Bengaluru; Edited by Byron Kaye and Richard Pullin

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