ACCC Nods to Shell’s BG Takeover

The Australian Competition and Consumer Commission (ACCC) announced that it will not oppose the proposed USD 70 billion acquisition of BG Group by Royal Dutch Shell.

The ACCC considered whether the proposed acquisition would reduce the supply of gas or reduce competition to supply gas, to domestic customers by aligning Shell’s interest in Arrow Energy with BG’s LNG facilities in Queensland.

“The ACCC’s view is that the proposed acquisition would be unlikely to substantially lessen competition in the wholesale natural gas market, in either Queensland or eastern Australia more broadly,” ACCC Chairman Rod Sims said.

During its review, the ACCC received a large number of submissions from market participants concerned about the competition effects of the proposed acquisition and the current state of the east Australian gas market.

Some urged the ACCC to approve the acquisition, but only with undertakings from the merger parties to make gas available domestically. These market participants considered that the proposed acquisition may provide a ‘route to market’ that allows Arrow’s gas to be developed more quickly.

“In the course of its review, the ACCC considered potential undertakings suggested by interested parties.”

“The ACCC can, however, only accept undertakings where competition concerns arise from the acquisition and it finds that certain undertakings can effectively address those concerns. In this case, the ACCC did not find merger-specific competition concerns that required an undertaking to remedy,” Sims said.

The East Coast Gas Inquiry is a separate 12 month review being conducted by the ACCC into the competitiveness and structure of the east Australian gas industry. It is scheduled to be finalised with a report to the Minister in April 2016.

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