ACCC approves Viva Energy's acquisition of OTR Group with divestiture agreement

Company News

by Glenn Dyer

In its second decision on Thursday regarding a significant acquisition, the ACCC has announced its approval of Viva Energy's (ASX:VEA) proposed acquisition of the convenience store chain, OTR Group. The decision comes after the Commission accepted a court-enforceable undertaking from Viva Energy, committing to divest 25 Coles Express sites in South Australia.

This decision follows a similar structure to the Commission's approval of Woolworths' purchase of 55% of Petstock, contingent on the sale of 41 pet shops in multiple states.

OTR Group, a fuel and convenience retailer, primarily operates in South Australia, boasting the largest retail fuel network in the region. Viva Energy and its related companies have a nationwide fuel supply chain, including Coles Express convenience sites.

With the acquisition, Viva Energy intends to expand the OTR brand to Coles Express sites in other states. The ACCC's review primarily focused on areas of overlap in OTR Group and Viva Energy's operations, predominantly in South Australia and the Northern Territory, assessing competition effects at both retail and wholesale levels.

ACCC Commissioner Stephen Ridgeway noted, "Without the divestiture, the proposed acquisition would combine the largest retail fuel network in South Australia with Viva Energy's retail network, providing Viva Energy with an extended network that is significantly larger than its next largest rival. The ACCC was concerned that the proposed acquisition would adversely affect competition and reduce choice for consumers in Adelaide and Ceduna."

Initially offering to divest 23 of its 32 retail sites in Adelaide, Viva Energy increased the number to 25 (24 in Adelaide and one in Ceduna) in response to ACCC concerns. Chevron has been proposed as the upfront purchaser of these divestiture sites.

Chevron, a global fuel producer, importer, wholesaler, and retailer, plans to expand into South Australia with this acquisition. The ACCC considered Chevron's experience, financial capability, and plans to operate the divestiture sites.

In exchange for the 25 divestiture sites, Viva Energy will receive 13 Chevron sites located in Queensland, New South Wales, and Western Australia. Mr. Ridgeway affirmed, "The ACCC considers that the undertaking given by Viva Energy will create a viable, effective, standalone, independent, and long-term competitor."

With this undertaking, the ACCC does not anticipate a substantial reduction in competition resulting from the proposed acquisition. Viva and OTR's primary rivals include Ampol and 7-Eleven, with the latter recently acquired by Japan's 7 & i group. The new owner of 7-Eleven aims to expand its site numbers in Australia, capitalising on the country's growing population and expanding its food product offerings in the market.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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