Brussels, 07/09/2001 (Agence Europe) - As we have already reported and in the same way as it had done in August for the Deutsche Shell/RWE-DEA deal, the European Commission has referred to the German Competition Authority the examination of the impact in the downstream markets for refined oil products of a proposed joint venture between Deutsche BP and E.ON. At the same time, the Commission also took the view that the deal's effect in the petrochemicals sector required further review and started an in-depth investigation on 25 August.
BP plc is a UK-based group with world-wide oil and gas activities. Its German downstream oil activities are operated by wholly owned subsidiary Deutsche BP GmbH. E.ON is the ultimate parent of a vertically integrated energy group primarily active in Germany. In the deal notified to the Commission, BP is acquiring a 51% shareholding in Veba Oel AG, currently a 100% subsidiary of E.ON active in the oil and petrochemicals business (Veba and Aral brands). E.ON has the option to sell the remaining shares to BP, transferring sole control over Veba Oel at a later stage. E.ON's chemical activities operated through its subsidiary Degussa will remain outside the joint venture.
On 20 August 2001, the German Competition Authority (Bundeskartellamt) asked the European Commission to refer part of the examination. This is allowed if a merger threatens to create or strengthen a dominant position and significantly impede competition in a distinct market within a Member State. The Bundeskartellamt argued that the proposed venture threatened to create or strengthen a dominant position on the market for motor fuel retailing and several other oil product markets. In its analysis, the Germany authority took into account the proposed combination of the downstream oil business of Shell and DEA. This separate German deal was notified to the Commission on 10 July 2001 and was referred partly by decision of 23 August 2001 to the Bundeskartellamt as regards mineral oil products (EUROPE of 25 August, p.5).
As a preliminary conclusion, the Bundeskartellamt found that the BP/E.ON transaction risked creating a situation whereby the new venture, together with a combined Shell/DEA and the other major oil companies would hold a collective dominant position, in particular on the market for motor fuel retailing in Germany. The Commission's findings in its first-phase investigation support the preliminary analysis made by the German Competition Authority. The Commission believes that the Bundeskartellamt is best placed to assess the competitive impact of the case on the oil products market in Germany, as this will require the investigation of local sub-markets and supply relations. In addition, the Bundeskartellamt has only recently concluded an investigation into alleged abusive pricing practices of the major oil companies in Germany which gives it considerable expertise of the sector. The German authority has four months to take a final decision.
The Commission's first-phase investigation also highlighted concerns regarding the deal's impact in the petrochemicals sector which justify the investigation launched in August (see above-mentioned EUROPE). The combination of the respective petrochemicals activities of BP and E.ON on the one hand, and Shell/DEA on the other, raise fears of a creation of a collective dominant position on the market for the supply of ethylene on the ethylene pipeline network called "ARG".