Press release

Petrol station merger given chance to offer solution

MFG has the chance to avoid a full merger investigation by the CMA following its completed acquisition of petrol stations and fuel supply contracts from Murco Petroleum Limited – if it can offer an acceptable solution to address competition concerns in the local area of Hythe in Kent.

• From: Competition and Markets Authority
• Published: 22 December 2014

Motor Fuel Group Limited (MFG) has acquired 228 Murco branded petrol stations and 226 fuel supply contracts for independent dealers from Murco Petroleum Limited.

Pre-acquisition, MFG owned and operated 60 petrol stations in the UK under the BP, Jet, and Total brands.

The Competition and Markets Authority (CMA) has found that the deal raised competition concerns that could lead to higher petrol and diesel prices in the local area of Hythe, Kent where MFG operates the BP petrol station with a Murco petrol station as its nearest rival pre-merger. After the merger, with MFG controlling the Murco petrol station, MFG will face only one separate competitor within a 10 minute drive-time of its petrol station.

The CMA did not find any competition concerns resulting from the deal in other areas of the country (whether on a national or local basis) or regarding the retailing of auto-LPG, the retailing of groceries or the wholesale supply of fuel to third parties.

Michael Grenfell, Senior Director and decision maker in this case, said:

In the Hythe area, where the merging parties’ petrol stations are situated close to each other, we are concerned that there is a realistic prospect that after the merger there will be insufficient competition from other petrol stations in the area to prevent higher prices or service levels being compromised. We therefore propose to refer the merger for an in-depth investigation unless MFG offers an acceptable remedy to address our competition concerns in a clear-cut way.

Notes for editors

1. The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. In April 2014 the CMA took over the functions of the Competition Commission and the competition and certain consumer functions of the Office of Fair Trading.
2. Under the Enterprise Act 2002 (the Act) the CMA has a duty to make a merger reference, resulting in a full phase 2 merger investigation, if the CMA believes that it is or may be the case that a ‘relevant merger situation’ has been created, or arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and that the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
3. Under the Act a ‘relevant merger situation’ is created if 2 or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million (‘the turnover test’) or as a result of the transaction, in relation to the supply of goods or services of any description, a 25% share of supply in the UK (or a substantial part of the UK) is created or enhanced (‘the share of supply test’).
4. The CMA considers that it is under a duty to make a phase 2 merger reference in this case under section 22(1) of the Act. However, the duty to refer is not exercised pursuant to section 22(3)(b) while the CMA is considering whether to accept undertakings under section 73 of the Act in lieu of a reference. Pursuant to section 73A(1) of the Act, MFG has until 30 December to offer an undertaking to the CMA that might be accepted by the CMA under section 73(2) of the Act. If no undertaking is offered or accepted, then the CMA will refer this merger pursuant to sections 22(1) and 34ZA(2) of the Act.
5. All the CMA’s functions in phase 2 merger investigations are performed by inquiry groups chosen from the CMA’s panel members. The appointed inquiry group are the decision makers on merger investigations.
6. The CMA’s panel members come from a variety of backgrounds, including economics, law, accountancy and/or business; the membership of an inquiry group usually reflects a mix of expertise and experience (including industry experience).
7. The inquiry group may extend the 24-week period within which it is required to publish its report by no more than 8 weeks if it considers that there are special reasons why the report cannot be published within that period.
8. The text of this decision will be placed on the case page as soon as is reasonably practicable.
9. Enquiries should be directed to Siobhan Allen (Siobhan.Allen@cma.gsi.gov.uk,020 3738 6460).
10. For information on the CMA see our homepage, or follow us on Twitter @CMAgovuk, Flickr and LinkedIn. Sign up to our email alerts to receive updates on merger cases.

Published 22 December 2014