The German Cartel Office will investigate the recent Shell/DEA and BP/Aral fuel retailing deals.
Germany’s service station market is highly competitive, with price wars last year demolishing any hopes the retailers had of making profits as high crude oil prices increased costs. Consolidation has been expected for some time, especially as companies such as RWE and E.ON look to reinforce their positions in the electricity and gas markets across Europe.
The joint venture between Shell and DEA, part of RWE Group, would have 3,200 service stations and approximately 24% of the market. While each partner would own 50%, Shell would receive an additional 1% in 2004, and RWE would have the right to sell the company outright to Shell. BP’s acquisition of Aral sites in Germany, meanwhile, would position the UK giant alongside Shell and DEA at the top of the table, with BP selling its stake in Ruhrgas in return for the stations.
Due to the dominant positions that these foreign oil companies would hold, the merger has led the European Commission to allow the German Cartel Office to probe the plans of the two companies, and investigate whether they would have a detrimental effect on competition. This looks like a sensible move – given that the deal is almost entirely domestic, the Cartel Office should have greater knowledge of the market and thus be in a better position to investigate.
Provided they that do not seem to prevent healthy competition, the Cartel Office will approve the mergers while the EU’s antitrust authorities check other elements of the Shell/DEA merger. The regulators should give their decisions by mid-September.
