Ampol’s $1.1 Billion Acquisition of Service Network Faces Obstacle

Ampol’s proposed acquisition of the EG Australia service station network, valued at $1.1 billion, has encountered a significant obstacle. The Australian Competition and Consumer Commission (ACCC) has refrained from granting approval, necessitating further investigation.

Regulatory Hurdles for Ampol’s Acquisition

The ACCC, which regulates mergers exceeding $200 million, raised concerns that this acquisition could severely impact competition in the petrol market across Australia. The commission is currently examining the implications of the merger.

Concerns Over Competition

• The ACCC has identified 115 EG sites that may reduce competition.
• Potential negative effects on major metropolitan areas: Brisbane, Canberra, Melbourne, and Sydney.
• No approval has been granted yet, and the investigation continues.

ACCC Commissioner Philip Williams highlighted the merger’s impact, stating that combining two significant fuel retailers could harm local market competition.

Ampol’s Strategy and Market Position

Ampol operates over 1,800 branded service stations throughout Australia. To alleviate competition-related issues raised by the ACCC, the company has proposed selling 19 of the service stations involved in the acquisition. However, the ACCC has determined that this sale may not adequately resolve the concerns.

Background on EG Australia

EG Australia already operates service stations under the Ampol brand and supplies approximately 2.3 billion litres of fuel annually. The British parent company, EG Group, entered the Australian market in 2019 by acquiring the Woolworths Petrol business and its 540 outlets for $1.73 billion.

Market Trends and Future Implications

The fuel industry is undergoing significant changes due to the rise of more efficient and electric vehicles. Additionally, the increase in remote work is contributing to a decline in fuel consumption. This evolving landscape presents both challenges and opportunities for major fuel retailers like Ampol.

As Ampol’s acquisition of EG Australia faces regulatory scrutiny, its outcome will be crucial for the future competitive dynamics of the petrol market in Australia.