Competition body gets cold feet on Sasol deal
Carli Lourens
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Trade and Industry Editor
PROSPECTS for a mooted merger between Sasol Oil and Engen to form SAÆs largest fuel company were dealt a blow yesterday when the Competition Commission made an about-turn, saying it no longer supported the deal.
The commission recommended the merger to the Competition Tribunal earlier this year, subject to certain recommendations. But it was forced to change its mind at the tribunal hearings as opponents of the deal raised pertinent questions on its shortcomings.
YesterdayÆs about-turn also brought to the fore issues of capacity within the commission as these queries could have been picked up before it made the recommendations. It also reduced business confidence in the regulatory body.
The about-turn came despite offers by the merging parties to sell some of the merged entityÆs fuel-production capacity and service stations in an attempt to quell the commissionÆs new concerns. Legal counsel for the commission said it had made a mistake by not assessing properly the horizontal effects of the deal, which it earlier said could have a profound effect on the domestic economy.
Prospects for the merger looked even bleaker after tribunal chairman Dave Lewis questioned governmentÆs capacity to act swiftly against potential anticompetitive behaviour by the merged entity, Uhambo Oil.
Sasol and Engen have proposed a range of remedies, such as selling part of the Natref inland refinery, selling fuel stations, and capping retrenchments at 453 for two years after the merger, among other things, in a bid to push the deal through. But the commission now says it believes that no remedies could address its anticompetitive concerns.
Legal counsel for the merging parties Fanie Cilliers said it was ôdifficult to see why the commission had changed its stanceö.
In the merging partiesÆ final arguments, Cilliers said the companies opposing the deal ù BP, Shell, Total, Chevron and Masana ù had dressed up their own interest as competition concerns. He said much of their argument comprised theories that were not based on evidence and should, therefore, not be considered as reasons to prohibit the merger.
One of the main concerns most opposing oil companies voiced earlier was that Uhambo would restrict sales to them in the inland area where they did not have refining capacity.
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